Reserve Bank Likely to Cut Rates to 3.85% by End of 2025

What's the latest news on New Zealand's interest rates?

The Reserve Bank of New Zealand (RBNZ) has indicated that it is likely to cut interest rates twice more before the end of the year, and continue to cut rates through 2025.

This is a change from the RBNZ's previous guidance, which saw the official cash rate (OCR) at 3.85% by the end of 2025. The OCR is currently 5.25%.

The RBNZ's decision to cut rates is in response to the global economic slowdown and the impact it is having on New Zealand's economy.

How will this affect borrowers and savers?

Lower interest rates will make it cheaper for borrowers to take out loans, which could stimulate economic activity.

However, lower interest rates will also mean that savers will earn less interest on their deposits. This could have a negative impact on retirement savings and other long-term financial goals.

What are the risks of cutting interest rates?

Cutting interest rates too quickly could lead to inflation. Inflation is a general increase in prices and can erode the value of savings.

What is the RBNZ's target inflation rate?

The RBNZ's target inflation rate is 2%. Inflation is currently well above this target, at 6.9%.

What is the ANZ Research's outlook on interest rates?

ANZ Research continues to expect that interest rates will not be cut until 2025.

Sources

• Reserve Bank keeps the official cash rate unchanged at 5.25 percent
• New Zealand's central bank holds rates steady, signals more hikes in 2023
• Interest rates