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RBNZ pushes out first OCR cut into 2H 2025

The Reserve Bank has pushed out its likely first cut in its official cash rate (OCR) into the second half of 2025 and possibly not until the final quarter.

Wednesday, May 22nd 2024, 2:49PM

by Jenny Ruth

The central bank has also left the door ajar on a potential hike in the OCR later this year.

In its latest monetary policy statement (MPS), RBNZ left its OCR at 5.5% but it is now forecasting that it will peak at 5.7% in the December quarter of this year and raised all its quarterly forecasts thereafter.

In its February MPS, RBNZ had forecast the OCR would be steady at 5.6% through this year and would drop to 5.3% by the June quarter of 2025.

The latest forecasts don't have the OCR falling below 5.5% until the September quarter of 2025 and then only to 5.4%. It expects the OCR to fall to 5.1% by the December quarter of 2025, implying the possibility of two 25 basis point cuts in that quarter.

“Annual consumer price inflation (CPI) is expected to return to within the [monetary policy] committee's 1% to 3% target range by the end of 2024,” the statement said.

“The Welcome decline in inflation in part reflects lower inflation for goods anad services imported into New Zealand,” it said.

But domestically, “higher dwelling rents, insurance costs, council rates, and other domestic services price inflation” poses a risk to inflation expectations, it said.

Insurance costs have risen in reaction to a spate of weather-related disasters and earthquake risks while and council rates in some areas have risen at double-digit rates. The OCR is unlikely to affect either, regardless of its level.

RBNZ's quarterly inflation forecasts have risen slightly in some quarters out to mid-2027 but have remained the same in four of the quarters between now and the end of 2026.

For example, its forecast for the June quarter this year is unchanged from February at 0.6% but its forecast for the September quarter is now 1.3%, up from 1.2% previously while its December quarter forecast is unchanged at 0.4%.

Its forecasts for 2026 are lower in the March quarter at 0.4%, down from 0.5%, the same at 0.4% in the June quarter, but higher at 0.9% in the September quarter, up from 0.8%, and the same at 0.3% in the December quarter.

The central bank's forecasts for the unemployment rate are unchanged through to the end of 2025 when it has it rising slightly to 5.1% compared with its February forecast of 5%.

Tags: OCR

« Kiwi Adviser Network gets its own PI schemeGood and bad news for home owners from RBNZ »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 19 June 2024 3:59pm

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