Mortgage News

OCR cut to 3%

New Zealand's softening economic outlook and low inflation has led the Reserve Bank to cut the OCR to 3% today.

 

Thursday, July 23rd 2015

Here's what Reserve Bank Governor Graeme Wheeler said:

The Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis points to 3.0 percent.

Global economic growth remains moderate, with only a gradual pickup in activity forecast. Recent developments in China and Europe led to heightened uncertainty and increased financial market volatility. Particular uncertainty remains around the impact of the expected tightening in US monetary policy.

New Zealand’s economy is currently growing at an annual rate of around 2.5 percent, supported by low interest rates, construction activity, and high net immigration. However, the growth outlook is now softer than at the time of the June Statement. Rebuild activity in Canterbury appears to have peaked, and the world price for New Zealand’s dairy exports has fallen sharply.

Headline inflation is currently below the Bank’s 1 to 3 percent target range, due largely to previous strength in the New Zealand dollar and a large decline in world oil prices. Annual CPI inflation is expected to be close to the midpoint of the range in early 2016, due to recent exchange rate depreciation and as the decline in oil prices drops out of the annual figure. A key uncertainty is how quickly the exchange rate pass-through will occur.

House prices in Auckland continue to increase rapidly, but, outside Auckland, house price inflation generally remains low. Increased building activity is underway in the Auckland region, but it will take some time for the imbalances in the housing market to be corrected.

The New Zealand dollar has declined significantly since April and, along with lower interest rates, has led to an easing in monetary conditions. While the currency depreciation will provide support to the export and import competing sectors, further depreciation is necessary given the weakness in export commodity prices.

A reduction in the OCR is warranted by the softening in the economic outlook and low inflation. At this point, some further easing seems likely.

Comments

No comments yet

Most Read

Unity First Home Buyer special 4.29
SBS FirstHome Combo 4.29
China Construction Bank 4.85
Co-operative Bank - First Home Special 4.85
ICBC 4.85
Kiwibank Special 4.89
Westpac Special 4.89
BNZ - Std 4.89
SBS Bank Special 4.95
AIA - Go Home Loans 4.95
Co-operative Bank - Owner Occ 4.95
Nelson Building Society 4.93
ICBC 4.95
AIA - Go Home Loans 4.95
Wairarapa Building Society 4.95
TSB Special 4.95
ANZ Special 4.95
ASB Bank 4.95
SBS Bank Special 4.95
Westpac Special 4.95
China Construction Bank 4.95
Kiwibank Special 4.95
SBS Bank Special 5.39
ICBC 5.39
Westpac Special 5.39
BNZ - Classic 5.59
BNZ - Std 5.59
Co-operative Bank - Owner Occ 5.59
ASB Bank 5.69
AIA - Go Home Loans 5.69
Kiwibank Special 5.79
Kainga Ora 5.79
ANZ 5.79
SBS Construction lending for FHB 3.94
AIA - Back My Build 4.44
CFML 321 Loans 4.99
Co-operative Bank - Standard 5.95
Co-operative Bank - Owner Occ 5.95
Heartland Bank - Online 5.99
Kiwibank - Offset 6.35
Kiwibank 6.35
TSB Special 6.39
China Construction Bank Special 6.44
ASB Bank 6.44

More Stories

Four decades of 6-7% yearly house price growth ending

Friday, March 21st 2025

Four decades of 6-7% yearly house price growth ending

New Zealander’s reliance on property capital gains in the mid-single digits is at an end.

[TMM Podcast] Yelsa serves up “marine reserve” of property buyers

Friday, January 31st 2025

[TMM Podcast] Yelsa serves up “marine reserve” of property buyers

It’s been years in the making and former real estate agent Mike Harvey is now coming to market with his platform matching buyers and sellers, an offering he says will be a gamechanger for the industry.

Leaving last year's stumbling housing market behind

Friday, January 17th 2025

Leaving last year's stumbling housing market behind

As interest rates ease and job losses climb, New Zealand’s housing market faces a mixed year of modest growth, with conflicting forces shaping the outlook for homebuyers and investors.

Don’t bet on house prices rising faster than incomes

Wednesday, January 15th 2025

Don’t bet on house prices rising faster than incomes

Former Reserve Bank Governor and National Party leader Don Brash says there are grounds for believing that house prices may finally have ended the three-decade period when they rose significantly faster than incomes.