The RB needs to be careful to place any rate cut in the right context of supporting the NZ economy through the quake shock, however, they have to be careful. Once the rebuilding starts there are likely to be shortages of labour and possibly materials which will drive inflation, so the explanatory path needs to be laid bare now.

Its also a quirk of accounting that rebuilding will boost GDP, but there could be other knock on effects from ex-Cantabrians relocating to other parts of the country… but that doesn’t excuse putting structural issues to one side… they haven’t gone away and still need to be addressed.

But when is the question… my pick is after the election… we have a few months of everyone getting back to business, then the RWC, then the election – there are lots of excuses not to do anything…. and I suspect that Key will want to see a fairly strong mandate to get this process going… I guess we will hear a lot about structural reform in the election period.