Perspective with Heather du Plessis-Allan: Today's OCR cut comes better late than never

Good news - the Reserve Bank has finally done the thing many of us thought was necessary, and they've gone for a double cut in the OCR of 50 basis points. That's the good news. The bad news is that they've been forced to do it because they didn't do it earlier, as in, they haven't cut as quickly as they should have. I mean, think back to July when they actually chose not to cut at all, which was clearly a mistake at the time - but became even more of a mistake when we saw the shock GDP number that followed. We saw that in the three months before that decision, the economy had actually contracted by a whopping 0.9 percent and the Reserve Bank hadn't really noticed at all. And the bad news, I suppose, again, is that they could have done a double cut last time when two of them on the Monetary Policy Statement said we should go double cut. But more of them said, no, let's just go with the single cut. So they've gone with a double cut today - vindication for two, it would seem. We're gonna stick to the good news though, which is that, finally, the Reserve Bank has caught up with the rest of us. The economy is cooked, and we need to do something, so they have delivered it. They admit that this is a signal. The signal is it's okay to go out and spend and invest - because they've realized, finally, that people are freaked out, right? There have been too many predictions of green shoots just before the economy falls again, which freak people out, and there have been too many bad surprises which freak people out. Business confidence is shot, look at the QBSO yesterday. Consumer confidence is also slightly increasing, but still really negative. People are holding on to their money, they're saving instead of spending, they're worrying instead of investing. And this cut is a circuit breaker that's supposed to snap us out of our fear. Now, there are some who worry that we are actually already so freaked out that even this cut, given how big it is, could spook us all over again. It's possible, maybe it could happen. But I think what's more likely is that it's going to give the assurance that people need. And the assurance is that the people in charge of the economy actually realize how bad things are - and are prepared to be bold. And I'll tell you what, it's better late than never. LISTEN ABOVESee omnystudio.com/listener for privacy information.