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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 July

  • All experts surveyed predict a OCR hold for this month.
  • Nearly half (45%, 5/11) expect that the next move will be an increase in November this year.
  • None of the experts foresee a decrease in the cash rate at any time in the next 3 years.

May
HOLD
July
HOLD
There are neither firm nor reliable indications that sustained inflation is imminent. Here and there is anecdotal evidence of price pressures because of bottlenecks here and there in the economy. But that's to be expected in the current situation.

May
HOLD
July
HOLD
Because Orr said this is what he would do.

The economy is running hot but struggling to deliver on strong demand. With intense skills shortages, substantially higher freight costs and supply chain issues, and other cost increases, inflation is going up. Strong consumer demand, fueled by cheap money, means the Reserve Bank will be looking to dampen back the heady levels of activity.

May
HOLD
July
HOLD
I previously thought the OCR would not increase until early - mid 2022, however due to a higher than expected GDP, it is likely that the RBNZ will increase the OCR sooner rather than later. However, it is also likely to be a small increase, as the RBNZ will want to continue to stimulate the economy as we ride out the pandemic.

May
HOLD
July
HOLD
They will likely respond to both sides of their mandate (prices, employment) look like requiring a change - recovery has been faster and stronger than expected, and inflation pressures look like being more than purely transitory.

Stronger than expected GDP figures and solid wider economic recovery. However, weakening business confidence and wider global issues are what might keep the OCR on hold a little longer than some economists anticipate.

May
HOLD
July
HOLD
It is a question of when rather than if interest rates go up. There is evidence of a tight labour market, and little sign that the housing market is slowing down. This could point to the need for the Reserve Bank to think about increasing interest rates later this year. An issue will be how temporary or permanent increased inflation pressure and inflation expectations might be, so we are likely to receive a "wait and see" message from the Reserve Bank.

May
N/A
July
HOLD
Demand has rebounded strongly, and it will soon be appropriate to start removing the monetary stimulus that was put in place after the Covid shock.

May
HOLD
July
HOLD
There is a pretty strong case for moving towards a higher OCR and by November the MPC will have been able to see two more CPI reads (and a sense of what difference the vaccination programme is making to the mood).

May
HOLD
July
HOLD
Because of rising inflation dangers in the economy

May
HOLD
July
HOLD
There remains higher uncertainty in the economic outlook of New Zealand. Covid-19 and vaccination continue to be the leading factors contributing to the uncertainty.

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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