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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 2.00%

Next RBNZ OCR announcement: 13 July 2022

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 May

  • 27% of panellists believe the OCR will increase at every remaining meeting this year
  • Just over half of experts agree with tighter lending rules for home loans
  • All economists predict an OCR increase in May

April
RAISE
May
RAISE
Adrian Orr has told us that this is what they intend to do

April
RAISE
May
RAISE
Further removal of monetary stimulus is required.

April
RAISE
May
RAISE
Some genuine increase in underlying inflation pressures that needs to be countered; risks to rising inflation expectations; optics of still very low interest rates with high headline inflation.

April
RAISE
May
RAISE
We've got a lot of inflationary pressure across many sectors, while unemployment is still low - so there's a clear case to keep raising the OCR. The big concern is probably inflation expectations too, which if they keep rising, will make it even harder to rein in actual inflation.

April
RAISE
May
RAISE
The RBNZ will need to lift interest rates above neutral levels for a period, to bring down inflation pressures.

April
RAISE
May
RAISE
Inflation pressures are obvious, and further increases in the OCR have been flagged by the RBNZ.

April
RAISE
May
RAISE
Inflation is running at very high levels. We expect inflation to peak around 7%yoy. And inflation expectations are becoming unanchored. The RBNZ is facing into the inflation threat by hiking interest rates. And we expect the RBNZ to hike at every opportunity (meeting).

April
RAISE
May
RAISE
RBNZ needs to move swiftly and at magnitude to shock expectations back in line, and we expect two back-to-back 50 basis point increases. Inflation is at its highest in a generation, and inflationary momentum is still building. Households and businesses now expect higher inflation going forward, with inflationary expectations unanchored. Having moved fast on the downside but too slow on the upside, RBNZ is playing catch-up, and the longer it leaves more assertive action, the harder it will be to bring inflation back in line.

April
RAISE
May
RAISE
Expect a raise in May as well. The Bank is well behind the game now, having seen big increases in core inflation and inflation expectations, but with the OCR still no higher than it was at the start of 2020.

April
RAISE
May
RAISE
With the rate of inflation at the moment, the RBNZ really has very little option to do anything other than increase the OCR. The only question remaining is, will it be a 0.25 or 0.5 increase?

April
RAISE
May
RAISE
Intense inflation pressures require a higher OCR but given the traction hikes will quickly get (indeed is already getting) on the housing market, we are picking a relatively modest peak of 3.5%.

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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