Banks welcome RBNZ's OCR cut

The recent 50-basis point cut to the OCR by the Reserve Bank (RBNZ) has been welcomed by banks, signaling relief for both businesses and households.

Finsure NZ country manager Jenny Campbell (pictured above, top left left) expressed optimism about the rate cut, saying, “This is relieving some pressure and making life a little easier for hard-working Kiwis.”

Campbell added that many borrowers are looking to refinance as they anticipate further rate drops in the months ahead.

Lorraine Mapu, ANZ New Zealand’s managing director for business and Agri, acknowledged the ongoing difficulties in the economic environment but welcomed RBNZ’s decision.

The “move by the Reserve Bank to drop the OCR to 4.75% will be welcome news to many of our customers,” Mapu said.

She pointed out that many ANZ business and agribusiness customers are on floating rates, which means they will quickly benefit from the lower interest costs, providing relief amid the current economic challenges.

Westpac NZ’s chief economist, Kelly Eckhold (pictured below), reflected on RBNZ’s latest decision and hinted at the possibility of further cuts.

“The RBNZ chose to cut the OCR by 50bps to 4.75%, as was expected,” Eckhold said.

The move aligns with the bank’s inflation objectives, and another cut could be on the horizon during the RBNZ’s November meeting.

Eckhold pointed out that economic activity in New Zealand remains “subdued,” with weak business investment and consumer spending, contributing to the need for ongoing rate cuts.

ASB chief economist Nick Tuffley (pictured above, bottom left) emphasised that RBNZ’s decision to cut rates is consistent with avoiding “unnecessary instability in output, employment, interest rates, and the exchange rate.”

Tuffley indicated that RBNZ is likely to maintain its easing stance, with the potential for further cuts if inflation continues to stabilise around the 2% target.

“The RBNZ maintained an easing bias, but the speed and magnitude of subsequent cuts look to be conditional on the economic outlook,” Tuffley said.

Kiwibank’s chief economist, Jarrod Kerr (pictured above, bottom right), described RBNZ’s recent rate cut as a decisive move to regain economic momentum.

“We’ve seen more tacking and jibing from the RBNZ than you’d expect to see out of a foiling AC75 Americas Cup boat,” Kerr said, drawing an analogy to the central bank’s strategic shifts.

Kerr praised RBNZ for acting quickly, especially after the August cut, noting that the latest 50-basis point reduction has helped the economy regain speed.

“Those calling for 50bps today were rewarded,” he said, emphasising that this move brings the OCR down to 4.75%, which could help ease pressure on the Kiwi dollar and support inflation control.

With the OCR now at 4.75%, many banks are closely watching for further data to determine how much more RBNZ might lower rates.

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