The results will impact borrowers and advisers nationwide
The Reserve Bank of New Zealand (RBNZ) has cut the official cash rate (OCR).
New Zealand's central bank met Wednesday to discuss monetary policy and made the decision to reduce the OCR by 50 basis points to 3.75%.
“Annual consumer price inflation remains near the midpoint of the Monetary Policy Committee’s 1% to 3% target band,” read a statement put out by the RBNZ. “Firms’ inflation expectations are at target and core inflation continues to fall towards the target midpoint. The economic outlook remains consistent with inflation remaining in the band over the medium term, giving the committee confidence to continue lowering the OCR.”
Until today, the official cash rate was 4.25%.
While New Zealand's OCR is the lowest it's been in recent years, the news still comes as welcome relief to Kiwis, many of whom have been struggling amid rising cost of living and reduced employment opportunities.
Earlier this month, New Zealand's unemployment rate ticked up to 5.10%. Rising unemployment rates have left some would-be homeowners cautious about entering the market at a time when job security is still questionable. Meanwhile, for those without a job, borrowing might not be an option at all.
On the flip side, inflationary pressures in the Kiwi Country appear to be under control. Last month's consumer price index (CPI) revealed that inflation in New Zealand remains steady – up 0.5% for the quarter, or 2.2% for the year – and in line with expectations. The results gave market players hope for future rate reductions, many of whom updated their forecasts to include a February rate cut.
Ahead of the anticipated rate cuts — and an attempt to spark market activity — both Bank of New Zealand and TSB revealed reductions in their home loan rates.
