Perspective with Heather du Plessis-Allan: The pressure's on the RBNZ to fix the economy - fast

Well, I think it's fair to say that the GDP print has come in at something of a shock.

The Reserve Bank was picking a contraction of 0.3 percent. The consensus was a contraction of 0.4 percent. The worst-case prediction from one of the banks was a contraction of 0.5 percent. It's come in at a contraction of 0.9 percent, which is basically twice as bad as most of us thought.

Now, the immediate problem that we have is what this is going to do to confidence, because people are already scared.

That is why it's taking this country so long to come out of recession, because every single piece of bad news like Trump's tariffs earlier this year freaks us out all over again, so we keep our wallets shut for longer.

There are people out there who absolutely can afford to spend more money, but they're choosing not to because they do not know that they can trust that we're through the worst of it.

This is part of the reason, if not one of the bigger reasons, why the Reserve Bank's cuts to the OCR are not stimulating the economy like the bank thought that they should be.

And this number that we see today, I fear, is going to do this all over again. And it's gonna freak us out all over again.

And I think the reason we're going to be freaked out all over again by this is that we think that the people who are in charge, mainly the Reserve Bank, but also the Government who keep telling us that the economy is definitely recovering, really have no idea how bad this is.

Now, I think it is a little unfair to blame anyone but the Reserve Bank right now because they really deserve it. The verdict is in on this now, isn't it?

They have well and truly stuffed this up, they have no idea what is going on in this economy.

In July, which was only one month after Q2 ended, we'd just gone through this massive contraction - and the next month, they decided they didn't need to cut the cash rate anymore.

They held the cash rate. That now should blow your mind.

Just a month ago, they released their monetary policy statement forecasting the contraction at only 0.3 percent They got it wrong by a factor of 3 percent.

Now, what them getting it so badly wrong now means is that the pressure is on them to fix this and fix this fast and do a double cut in October, really more to restore confidence than anything, because confidence is what we are very much lacking at the moment.

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