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How Trump and a strong economy could push interest rates up

Kiwibank’s chief economist is picking interest rates could rise 6-9 months earlier than the Reserve Bank is predicting, fuelled partly by rates hikes in the US and wage growth at home.

The Reserve Bank held interest rates steady this week, indicating they might stay that way well into 2020.

However, Kiwibank chief economist Jarrod Kerr says an economically aggressive US president, and inflationary pressures both here and in the US could see Kiwi interest rates going up earlier in 2020 than the Reserve Bank is predicting.

This week’s household labour force survey showed New Zealand’s employment rate at its highest ever level. While that hasn’t yet impacted on wages, Kerr is hopeful economic confidence could push wages up and lift interest rates.

In this interview with Newsroom’s Mark Jennings, Kerr discusses the Donald Trump effect, recent share market volatility, business confidence, the benefits of the lower Kiwi dollar and the different economic pressures in regional New Zealand.

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