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RBNZ Official Cash Rate forecast

Expert analysis and predictions for the Reserve Bank of New Zealand's OCR decisions.

OCR currently at 0.25%

Next RBNZ OCR announcement: 18 August 2021

We asked our panel of experts to have their say on New Zealand’s property market, the possible extension of the travel bubble, and more.

Skip ahead to read the latest analysis, see how the OCR has changed over time and learn more about how the official cash rate affects you.

What our experts said for August

  • 80% of experts and economists believe the OCR will increase in August.
  • 4 in 5 feel negative about housing affordability.
  • 58% agree with implementing mortgage lending limits to cool property prices.

July
HOLD
August
HOLD
There is no evidence of sustained inflation yet or of unhinged inflationary expectations. Besides, the NZ economy is not out of the woods yet. Other central banks have put monetary policy on hold, too, because of the uncertain outlook.

July
HOLD
August
N/A

July
HOLD
August
RAISE
We expect the Reserve Bank will increase the OCR by 50 basis points in August, to 0.75%. Inflationary pressures are building further, the economy is likely operating beyond maximum sustainable employment, and the necessity for the current levels of super stimulatory support doesn't exist. Supply is constrained, but just as importantly demand is incredibly strong, and we're worried we might be overcooking the economy. With the COVID-19 Delta variant surging globally, and the economy still recovering, there's still need for support. Just less support than what we currently have. It's time to wean the New Zealand economy off the morphine and onto the Panadol. We also think RBNZ might make changes to FLP to further reduce monetary support from "super supportive" to "very supportive" levels.

July
HOLD
August
RAISE
Following the stronger than expected CPI, it is highly likely that the RBNZ could increase the OCR this month. I would be surprised if it is anything other than a minimal increase though, as the economy is still very dependent on our ability to keep COVID under control, and as we are a long way off having the majority of our population vaccinated, our economy continues to be at risk because of this.

July
HOLD
August
RAISE
Inflation is a bit higher and perhaps a bit more persistent than previously thought [and the] labour market is strong, hard to see case for keeping monetary policy on previous level of support.

July
HOLD
August
RAISE
Stronger than anticipated economic conditions, signs of banks starting to lift interest rates. House prices have remained strong.

July
HOLD
August
RAISE
Inflation has recently breached the target. The larger than expected fall in the unemployment rate further points to increased tightness in the labour market. Despite the various measures put in place, house price inflation remains too high. This is all pointing towards the RBNZ nudging up the interest rate.

July
HOLD
August
RAISE
The economy is running hot, and emergency-era policy settings are no longer appropriate.

July
HOLD
August
RAISE
Core inflation is now a bit above target, and the unemployment rate in June was probably already at the NAIRU. Some monetary restraint is appropriate, but done cautiously given (a) the uncertainty and (b) 10 years of undershoots.

July
HOLD
August
RAISE
The economy is clearly overheating, not least due to previous monetary stimulus. Urgent measures are needed despite previous guidance.

July
HOLD
August
HOLD
There remains a lot of uncertainty on the macroeconomic outlook of New Zealand. Although the economy is doing well, the growth trend to continue is difficult to predict.

How has the Official Cash Rate changed over time?

What is the Official Cash Rate and who sets it?

The Official Cash Rate (OCR) affects the interest rates that people and businesses in New Zealand pay when they borrow money or earn on their savings. The OCR is set by the Reserve Bank of New Zealand whose aim is to keep prices stable.

The RBNZ does three main things:

  • formulate and implement monetary policy to maintain price stability and support maximum sustainable employment
  • promote the maintenance of a sound and efficient financial system
  • meet the currency needs of the public.

If the economy overheats and inflation rises to an unacceptable level, the RBNZ may increase the cash rate to discourage excessive borrowing and tackle rising inflation. If the economy slows down, the cash rate may be cut to support increased borrowing and spending and boost economic growth.

How the OCR can impact your finances

See how the official cash rate changes can affect your savings, term deposits, mortgages and what you can do about it.

If the rate rises

Ask your lender for a rate discount so that if rates do rise you won’t be worse off, or alternatively, compare other variable or even fixed-rate mortgages to find a better deal.

If the rate gets cut

See how your lender responds to the cut. If they don’t pass on the full rate cut, ask for a rate discount, and if you’re still not happy start comparing what other deals are in the market.

If the rate holds

Compare other variable-rate mortgages to make sure you’re still getting the best deal. If rates are tipped to rise in the near future you may also want to compare fixed rates.

If the rate rises

Find an account which offers the same features and fees but with a better rate.

If the rate gets cut

Consider comparing a competitive term deposit rate so your interest earnings don’t suffer.

If the rate holds

Carry out a quick comparison to make sure you’re getting the best return on your money. See what promotions banks are offering.

If the rate rises

Your rate won’t rise as you locked it in, so you can relax a little. If your fixed-rate mortgage is to end soon, start comparing what deals are on offer, so you don’t find yourself scrambling to lock in another rate.

If the rate gets cut

If you feel your mortgage is no longer competitive, you might want to obtain a quote from your lender to find out possible exit costs. If this figure is reasonable, you might want to consider comparing variable mortgages.

If the rate holds

Because your rate is fixed for an agreed period, a decision by the RBNZ to hold won’t have as much of an effect on you depending on how long you still have to go in your fixed term. As mentioned above, you still might want to monitor other deals in the market to keep informed.

If the rate rises

If rates rise, savings accounts rates could increase as well. If this happens, you might want to compare the rates of high-interest savings accounts. Remember that most term deposits have interest penalties if you withdraw your funds early, so bear this in mind.

If the rate gets cut

Your rate won’t change because it’s locked in, but if you’re nearing the end of your term, start comparing both high-interest savings accounts and term deposits to find a good deal.

If the rate holds

Compare accounts and ensure you’re aware of what’s on offer in the market.

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