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RBNZ Official Cash Rate forecast

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

Updated . What changed?

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OCR currently at 0.25%

Last RBNZ OCR announcement: 11 November

Speculation is mounting as to whether the Reserve Bank will will reinstate LVR restrictions before the planned date of April 2021. We asked our panel of experts for their thoughts on this and the possibility of another OCR drop in our November 2020 survey.

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 November

  • 33% of experts believe LVR restrictions should be reinstated before 12-month trial period ends
  • RBNZ reports total value, number of loans for first home buyers peaked in September
  • 92% (12/13) of experts surveyed predict the OCR to hold in November

September
HOLD
November
HOLD
Conventional monetary policy is on hold. RBNZ may tweak unconventional policy measures here and there but for now, no dramatic shifts are expected.

September
HOLD
November
HOLD
Because that's when Orr said he would lower it and the Reserve Bank have a tendency to stick to what they say

September
HOLD
November
HOLD
There is pressure for movement in both directions. There is more likely to be a decrease than an increase but the RBNZ will hold off on that decision for as long as they can.

September
HOLD
November
HOLD
The New Zealand economy is likely to remain weak into 2020, and we expect the Reserve Bank will move to provide additional support to boost investment if that weakness persists (and we do expect that weakness to persist). The Reserve Bank has clearly signalled that a negative OCR and a Funding for Lending Program are its preferred options if additional monetary policy support are required, and we expect that they will exercise their options once their forward guidance expires.

September
HOLD
November
HOLD
The RBNZ has indicated it will keep the OCR on hold until at least March 2021, but also a negative OCR is likely.

September
HOLD
November
CUT
This is a difficult call, as the RBNZ is likely to want to further stimulate the economy, but will also be wary of reducing interest rates which will likely increase interest in the property market even further. The property market generally slows down somewhat over the festive season, however it also usually slows down during a general election year, so 2020 has proven to be a year of exceptions in the property market. I'm not convinced that the RBNZ will go with the "wait and see" method. I think there is a fair chance that the OCR will drop with the next decision, and the RBNZ will re-impose deposit restrictions for property investors at the same time. If not in November, then highly likely in Q1 2021.

September
HOLD
November
HOLD
Long-standing 'forward guidance' from RBNZ (dating back to March)

September
HOLD
November
HOLD
The RBNZ seems intent on going negative. To impact the market, it's best to get ahead of expectations

September
HOLD
November
HOLD
The Reserve Bank still has a bias towards more monetary policy easing, but I don't think a negative cash rate is an absolute 100% certainty just yet.

September
HOLD
November
HOLD
Inflation expectations are very weak, inflation is below target, and yet the Bank has pledged not to change the OCR before March 2021.

September
HOLD
November
HOLD
That is what the RBNZ has strongly signalled.

September
HOLD
November
HOLD
No change expected over horizon

September
HOLD
November
HOLD
Forward guidance to leave it unchanged until mid-March, thereafter expecting a 50bp cut

How has the 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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