Interest rates NZ

New Zealand's central bank delivered its fifth straight interest rate hike on Wednesday and signalled a much more aggressive tightening path as authorities ...

But house prices are now falling -- with the central bank expecting them to be down 15% by year-end -- having surged throughout the pandemic. Business and consumer confidence has also dipped as the Ukraine war poses risks to global growth. "A broad range of indicators highlight that productive capacity constraints and ongoing inflation pressures remain prevalent," the central bank said. But Wednesday's forecast showed the central bank was set to tighten much more than many expected. The Reserve Bank of New Zealand (RBNZ) raised on Wednesday the official cash rate by 50 basis points to 2.0%, a level not seen since November 2016. read more

The country's very full employment levels are being pointed to by Reserve Bank Governor Adrian Orr as a key reason why households are going to be able to ...

Then this so called neutral is a bit of a moving feast and could rise to 5% meaning the OCR could go to 7- 8% Seems t0 mean we are all paying not only higher mortgages (as the OCR rises) but also we pay more money to the foreign banks listed below? If you are growing too fast to be able to supply the goods and services - its only inflation. Seems t0 mean we are all paying not only higher mortgages (as the OCR rises) but also we pay more money to the foreign banks listed below? We also know most of the shortages are seasonal jobs scattered far and wide that in reality a Kiwi could not support themselves on. People can't get the labour, get the resources, so, there is a sustainable growth rate that is below where we are. He conceded that Government spending was one "variable" the RBNZ had to deal with. And the number one other policy is make sure there's lots of houses. And of course that sheets home to New Zealand. And it sheets home in different ways. If you are growing too fast to be able to supply the goods and services - its only inflation. The answer was: "We believe it is putting upward pressure on aggregate demand and hence inflation - now. Banks are happy to talk with customers if people are employed and committed to continuing to service mortgages," he said.

The Reserve Bank is set to raise its benchmark interest rate to its highest level in six years as it rejoins the battle with surging inflation.

The "neutral setting" is regarded as the level at which the OCR is neither over stimulating the economy nor suppressing growth, although the cash rate is expected to hit at least 3% in the short term as the RBNZ tackles the current spike. ASB Bank economist Mike Jones said the RBNZ could afford to give "no quarter" to inflation and the need to get it under control as soon as possible. The Reserve Bank is set to raise its benchmark interest rate to its highest level in six years as it rejoins the battle with surging inflation.

New Reserve Bank forecasts suggest the OCR could climb as high as 4% by June next year.

“Admittedly, its forecasts have rate cuts pencilled in, in 2024, a little later than our own forecast. “We have been forecasting that this housing downturn would force the Reserve Bank to reverse course and cut rates in 2023,” he said. “Now the Reserve Bank has no choice but to increase the OCR, pushing up interest rates across the whole economy and creating more pain for mortgage holders.” The Reserve Bank is forecasting annual inflation will reduce to 4.4% by March next year and drop to 2.5%, within its target band, a year after that, but it is forecasting unemployment will rise gradually to 4.7% by March 2025. A silver-lining for mortgagees is that the Reserve Bank now sees light at the end the tunnel, and is forecasting the OCR to start falling towards the end of 2024. The Reserve Bank explained the size of its rate-hike by saying “a larger and earlier increase in the OCR reduces the risk of inflation becoming persistent, while also providing more policy flexibility ahead in light of the highly uncertain global economic environment”.

Reserve Bank of New Zealand lifts benchmark interest rate to 2 percent in fifth consecutive hike.

“A broad range of indicators highlight that productive capacity constraints and ongoing inflation pressures remain prevalent,” the central bank said. The increase took the cash rate to its highest since November 2016. New Zealand’s central bank raised interest rates by 0.5 of a percentage point to 2 percent on Wednesday as it tries to get a handle on inflation while signalling the benchmark rate would peak at a higher level than previously forecast.

Given they just refixed their mortgage payment terms on their two Wellington homes, today's Reserve Bank of NZ decision to lift the official cash rate by 50 ...

They decided to put one loan on a two-year fixed term and then split the other loan between a two-year term and a one-year term. When their mortgage terms recently came up for renegotiation, he and his wife were advised to put all their loans on two-year fixed terms so they could lock in today's low interest rates, instead of facing expected higher rates in the future. Originally, he and his wife were looking at a different more expensive second property and were given home loan approval by the bank to buy it, he said. Banks were lending "crazy sums" of money a year or two ago and many people tended to get the maximum they could afford and didn't leave themselves much "buffer or leeway", he said. Nick has a boarder in one room in his flat and shares the other bedroom with his son when he's caring for him. Nick is separated from his wife and the couple own a house she lives in and a flat Nick lives in.

The Reserve Bank (RBNZ) has increased the Official Cash Rate (OCR) to 2.0% from 1.5% - making this the second month in a row it has hiked interest rates ...

Screw the disconnect between the ability to pay for something and the price. I get your schadenfreude, just don't pretend good times are coming because it may eventuate a FHB stood a better chance of buying a year ago than in a year's time. Screw the disconnect between the ability to pay for something and the price. So anybody with cash is going to be an attractive buyer at the moment and could probably get a premium discount on the asking price. The Committee agreed to maintain its approach of briskly lifting the OCR until convinced that monetary conditions were sufficient to constrain inflation expectations and bring consumer price inflation to within the target range. As a result of the increase in labour supply, measured unemployment is expected to rise to around levels more consistent with maximum sustainable employment. On the costs of construction, members noted that the growing delay in accessing key building materials is significantly slowing activity, and increasing the financial risks associated with construction. Members agreed that while the direction of their monetary policy decision was clear, the extent and timing of future increases in the Official Cash Rate (OCR) still depends on the economic outlook and avoiding major risks. Consistent with the economic outlook and risks ahead, monetary conditions need to act as a constraint on demand until there is a better match with New Zealand’s productive capacity. It shows the OCR at 2.7% by September of this year, then 3.4% by December, then 3.7% by March and peaking at 3.9% in June 2023. The Committee viewed the projected path of the OCR as consistent with achieving its primary inflation and employment objectives without causing unnecessary instability in output, interest rates and the exchange rate. Earlier its pick was for a peak in this hiking cycle of just 3.4%. Now it sees the OCR hitting 3.4% by THIS December.