Banks rush to cut rates after RBNZ slashes OCR 50bp to 4.25%

ASB Bank and Kiwibank immediately published cuts in their lending and deposit rates while Bank of New Zealand swiftly followed. (See the rates change here)

Kiwibank cut its mortgage test rate from 8% to 7.5% “to provide greater financial flexibility for our customers” from Monday, Dec 2 and ASB cut its test rate from 8% to 7.6% from the same date.

With the 50 basis point cut from 4.75%, the central bank trimmed its future OCR projections through to the September quarter of 2026 when it expects it to be 3.2%, down from 3.35% in its last forecasts published in August. It expects the OCR to bottom at 3.1% in the March quarter of 2027.

The central bank has lowered its forecast for the December quarter consumers price index to 0.4% and the annual rate to 2.1% from 0.5% and 2.3% previously respectively.