Christoph Schumacher

Businesses respond much, much quicker.

Interest rates go up.

They simply stop investing.

They stop expanding.

Stop hiring.

Or stop hiring, yes.

So what we see is that the change of the OCR has a trickle effect and it's widely spread.

So the Reserve Bank is careful in doing so.

And we have seen that and it's a good sign.

I was very happy to see that the OCR didn't go up because it is a very blunt tool that impacts

in so many ways and right now possibly not the best tool to improve what's happening in New Zealand because you'll first need to get some momentum into economic

grows because it is a trickle-down effect.

If business expectations are low, then it's as much numbers and it's emotions and a mindset.

And I think that's a bigger danger.

What we have seen is that, yes, petrol at the pump has gone up.

But we are now seeing trickling this true into our expectations and our outlook.

And that's the dangerous part because then things become sort of a self-fulfilling prophecy.

We now expect things to get worse.

That means companies stop expanding, stop hiring people.

That in itself makes things worse because suddenly unemployment starts to go up.