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The official cash rate has been cut by 50 points, providing homeowners with some relief, and retailers with some hope.
New Zealand’s Reserve Bank has cut the official cash rate (OCR) by 50 basis points (bps) to 4.25 percent today and indicated a similar size cut will be announced after its next meeting in February.
The decision is in line with what most economists had predicted. It is the second consecutive 50 bps cut and third OCR reduction since August.
The Bank’s Governor, Adrian Orr, has warned mortgage holders not to expect too much from their banks, who are facing high international borrowing costs.
However, New Zealand’s major banks have responded positively, with ANZ, BNZ, Kiwibank, Westpac, and Co-operative Bank all announcing reductions. Those who didn’t pass on the full rate cut said they were protecting savers.
An indicative forecast in the Monetary Policy Statement suggested a slower rate of cuts next year, with the OCR falling to around 3.5 percent by the end of 2025.
The forecast endpoint for the OCR was also lifted a little to 3.06 percent, up from the previous 2.98 percent.
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