arises with other important releases or events. On 6 October, the Reserve Bank of New Zealand (RBNZ) released its Monetary Policy Review, announcing an increase in the Official Cash Rate (OCR) from 0.25% to 0.5%. 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. Have a chat to one of our advisers. We may also receive compensation if you click on certain links posted on our site. Needs analysis focus: what data do you need? The RBNZ has itself forecast (in its May Monetary Policy Statement) a peak in the OCR of just under 4% by the middle of next year. The inflation outlook, while highly uncertain over the medium term, is worryingly high at present. Westpac Bank's latest report said that financial markets have been quick to anticipate the next phase of monetary policy and were pricing in cuts to the official cash rate (OCR) as early as the second half of 2023. My advice for potential first home buyers is dont fear higher interest rates as you will be borrowing less than the market at its peak., Read more: Reserve Bank makes its September rate call. Explaining its decision for moving the OCR to 2.5% the Reserve Bank said at the time that global inflation has been largely driven by supply disruptions due to Covid-19 and the Russian invasion of Ukraine, combined with an overall increase in spending worldwide. The Reserve Bank reserves the right to make changes to this schedule, if required. Learn about how the OCR has changed over time What is maximum sustainable employment Our Chief Economist explains why we increased the OCR Video transcript: Official Cash Rate (OCR) explainer Audio: Kia ora, I'm Paul Conway, Chief Economist at the Reserve Bank of New Zealand. Your access to our unique and original content is free, and always will be. Compare accounts and ensure youre aware of whats on offer in the market. Second-tier US economic data paint softer economic picture and lower oil prices support the move, Food prices were up 12.1% in the year to March 2023 - which is the highest annual rate of increase seen since 1989; Kiwis 'crushed at the checkout', National's Willis says, US core retail sales not as weak as expected; 1 yr-ahead inflation expectations surge to 4.6%; Fed's Waller urges more tightening. advance. Reuters surveyed 23 economists ahead of the RBNZs Wednesdays cash rate announcement, with more than 60% expecting a 75 basis-point hike, taking the OCR to 4.25%. If rates are tipped to rise in the near future you may also want to compare fixed rates.If the rate risesFind an account which offers the same features and fees but with a better rate.If the rate gets cutConsider comparing a competitive term deposit rate so your interest earnings dont suffer.If the rate holdsCarry out a quick comparison to make sure youre getting the best return on your money. How many advisers have left the industry? BNZ agrees it's a "coin toss" but is leaning towards 25 basis points as well. As a result, rates dropped to their lowest level on record, going back to the 1960s. ASB has released its forecasts on the official cash rate (OCR) and mortgage rates ahead of the Reserve Bank of New Zealands (RBNZ) next announcement, quarterly Monetary Policy Statements (MPS), and six-monthly Financial Stability Reports (FSR). advance. When it is adjusted, it is usually done in 0.25% increments, as we saw this month. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. here. Term deposit rate increases are starting to filter through although they are limp new offers with banks falling further behind the OCR policy signals, Weaker US PPI inflation, higher jobless claims play to theme of weaker US economy and moderating inflation pressures, adding in expectations of just one more Fed rate hike, USD remains under pressure; US Treasury yields slightly higher, The banks are demonstrating that they won't hike interest rates just because the Reserve Bank would like them to - so it might be better for the RBNZ to adopt more of a waiting game, US CPI rises just 0.1% m/m; core up 0.4% - strong enough to maintain expectations for another likely Fed hike next month. "On the one hand, the path ahead for the economy is looking anything but smooth, with house prices falling and consumer confidence pummelled as household budgets are squeezed. ASB economists latest OCR forecast also suggests that mortgage interest rates are likely to settle at historically low levels, but slightly higher than the economists previous forecasts. Reserve Bank of New Zealand (file photo). ASB, ANZ, and BNZ also released their forecasts - expecting the OCR to reach 0.5% next month, according to Stuff.. ASB chief economist Nick Tuffley said the RBNZ had "clearly changed tack . We are New Zealand's central bank. Banks website at least one year in MPS/OCR review dates will shift to, It is clear that the OCR needs to go up. He Tipu Ka Hua Fund Opens To Advance Mori-led Research, Counting Carbon - NZ Contributes To Global C02 Stocktake. credit card debit, $25 per user - Pay by monthly NZ QSBO today; RBA meeting with consensus tilted towards a pause, market more convicted in that call than economists. Savers may be better off looking at challenger banks than the big banks, NZD/AUD recovers after strong Australian jobs report; NZD crosses recover, The Reserve Bank needs to show greater patience, NZD/AUD continues to drift lower and NZ/EUR falls to fresh two and a half year low, Backfire! Because your rate is fixed for an agreed period, a decision by the RBNZ to hold wont have as much of an effect on you depending on how long you still have to go in your fixed term. If your fixed-rate mortgage is to end soon, start comparing what deals are on offer, so you dont find yourself scrambling to lock in another rate. Please complete the form below and click on SIGN UP to receive daily e-newsletters from. You can subscribe to our economists regular interest rate reports, or read them online: And for a global outlook, our investment partners at BlackRock recently released their. "As expected, the RBNZ is still warning of all the challenges ahead and the need for continued policy support. While we receive compensation when you click links to partners, they do not influence our content. I then expect the RBNZ to be in a position to ease policy as early as November this year. Events calendar. Inflation expectations are far too high. live-stream 14 July - OCR Remaining release While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. Usually fourth Wednesday in February, May, Statistics New Zealand says the cost of living for households rose 7.7% in the year to March 2023, boosted by higher rents and interest payments and increased grocery food, fruit and vegetables prices, New Reserve Bank mortgage figures show homeowners paid close to $4 billion in interest during the March quarter, while total scheduled repayments topped $6 billion for the first time since the RBNZ started publishing this data, Softer than expected German CPI, GDP and Euro area GDP data drive German Bunds down 14-15bps. day after the monetary policy announcement. Our daily newsletter is FREE and keeps you up to date with the world of mortgage. At best, it has plateaued around 7.2% which leaves a substantial gap to the current OCR. That means its decreasing the value of your money faster than the interest rate is growing it in a term deposit. If those advocating for a CGT and other redistributive tax measures may be compared to a revolutionary band hiding out in the mountains, then Parkers reports are the equivalent of a bloody great ammunition dump! The RBNZ's assertive tightening to date is working, and the risk now is titled towards overtightening. Craig Pope (pictured above centre), the director of Craig Pope Financia, said he believed that the RBNZ was smart and would only increase the cash rate by 50bps at its meeting on November 23. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. live-stream, If you're using Scoop for work, we ask that you or your organisation pay a small license fee with Scoop Pro. After a period of much-needed respite over the holiday break, the RBNZ will be back to its regularly scheduled programming from late February. These investments are impacted by the changes in interest rates both here and offshore that have been occurring. Infometrics economists mull quantitative easing in 2020. RBNZ shocks with a 50bps hike. Watch: Economist says Kiwis will need tighter budgets as retailers plan massive price increases. review dates will be continuously published on the Reserve Only eight economists forecasted a sixth 50bp hike to 4% on November 23. The Official Cash Rate (OCR) will likely rise by 75 basis points today, one expert says. Any commentary provided are the personal views of the author and are not necessarily representative of the views and opinions of Squirrel. However, this doesnt mean you have to do anything with your investment. The Reserve Bank has double-pumped the Official Cash Rate with its surprise 50 basis point hike in an effort to blindside the markets. ASB has released its forecasts on the official cash rate (OCR) and mortgage rates ahead of the Reserve Bank of New Zealand 's (RBNZ) next . Steps to owning and managing Credit Suisse Group, with 24-hour and historical pricing before you buy. Published date: 16 February 2023 Last modified date: 22 February 2023 Timeline of our OCR announcements since November 1999 See our chart of OCR announcements Official Cash Rate (OCR) (updated at end of month) Chart Summary There are two types of OCR announcement over the course of the year. Like other central banks RBNZ is very likely to tighten the stance of monetary policy further. And why did the Reserve Bank lift it today? The bank continued to project the OCR to rise to about the 4 percent mark over the next year.. Ask your lender for a rate discount so that if rates do rise you wont be worse off, or alternatively, compare other variable or even fixed-rate mortgages to find a better deal. Millions of Kiwis are living in a state of financial stress, according to new research from global comparison site Finder. These will be published on the Reserve Bank's However next year plays out, well be watching closely - with plenty of commentary over on the Squirrel blog to help make sense of what the Reserve Bank announcements mean for Kiwi homeowners and our housing market. Most of those choices fall on a risk spectrum, where customers can choose low risk and low returns, or higher returns with higher risk. ", 'Not going away': Kiwis need tighter budgets as retailers plan price increases - economist, Copyright 2023 Discovery NZ Limited (Warner Bros. Find out more, TradeMe: Rents Soar For Small PropertiesTrade Me Property Sales Director Gavin Lloyd said the March 2023 figures show rents for apartments and small houses (1-2 bedroom) were soaring More>>, Seafood NZ: Welcomes Draft Industry Transformation PlanSeafood New Zealand Chief Executive Dr Jeremy Helson says the fishing industry shares the Governments vision of improving the environmental performance of commercial fisheries More>>, Reserve Bank: Proposes To Ease LVR RestrictionsThe Reserve Bank of New Zealand Te Ptea Matua is proposing to ease mortgage loan-to-value ratio (LVR) restrictions. See our Investor Hub for market commentary and the latest investment insights. If you are unsure you should get independent advice before you apply for any product or commit to any plan. Finder is committed to editorial independence. The RBNZ today opted to maintain monetary policy settings and keep the official cash rate at 0.25%. A move by the Reserve Bank of New Zealand to raise the official cash rate by 0.75% would be a step too far, according to some mortgage advisers. The official cash rate now sits at 4.25%, the highest in 14 years. Search for our upcoming events here. These two factors signal the need to continue applying contractionary monetary policy. Please help us keep it that way by allowing your browser to display Fixed mortgage rates have largely priced in future OCR rises courtesy of banks wholesale fundings costs, so if the RBNZ keeps to the same playbook, we should only see floating rates rise., A flat yield curve indicates markets expect rates to flatten at some point in the future, so the Monetary Policy Statement (MPS) will determine if markets need to adjust these expectations and subsequently fixed rates. We may receive compensation from our partners for placement of their products or services. The opinions expressed in this article should not be taken as financial advice, or a recommendation of any financial product. But Westpac's forecasts suggest the RBNZ would not cut the OCR until 2024. Both ASB and ANZ believe the OCR will begin to rise from August 2022. San Francisco-based First Republic is the third midsize bank to fail in two months. Reserve Bank lifts Official Cash Rate 50 basis points to 5.25% saying severe weather events have led to higher prices for some goods & services, US JOLTS labour market report shows much weaker demand for labour - US Treasury yields down 6-12bps, equities weaker, USD weaker. schedule, if required. Inflation remains elevated and beyond the target of RBNZ. Commentators only expect inflation to worsen given the Omicron outbreak and the war in Ukraine. This was also expected in financial markets; and furthermore, economists and analysts have already been talking that this is the start of a rising period for interest rates. To be sure, if the situation changes for the worse, then the RBNZ has options to maintain current settings for longer or even lower borrowing costs to support the economy. Get two weeks free access to NBRs Premium Online Subscription, which includes full access to all of NBRs great content on any device. Just when we thought the 'shock' had gone out of Orr RBNZ lifts the OCR to 5.25% in surprise move to combat cyclone inflation. If this figure is reasonable, you might want to consider comparing variable mortgages. They may do too much. Read more: ASB flooded with special home loan rate applications. Related to this, when interest rates change, it can lead to volatility (ups and downs) in sharemarkets and property markets. If the RBNZ goes aggressive on Wednesday, they are just increasingly the likelihood of a hard landing. US Treasury yields fall post CPI but then reverses much of that price action, NZ's largest bank raises fixed and floating home loan rates, savings account rates, and term deposit rates in a broad response to the recent RBNZ OCR rises, Mortgage rates were unmoved by the RBNZs big hike as traders bet any increase now will be matched with a cut later, US Treasury yields push higher, ahead of key CPI data tonight. Compare other variable-rate mortgages to make sure youre still getting the best deal. Sign up to get all the latest articles direct to your inbox. What will this mean for you? Westpac also believes it will be a 25 basis point lift. LVR tweaks substantive for owner-occupiers, Adviser returns from 15-year absence to much tougher finance market, Some good and bad news on the inflation war, Demand for mortgages continues to decline: RBNZ, Bank profits level out mortgage arrears rise, Passive managers piggy backing off active manager, Employers including KiwiSaver as part of pay packets instead of on top. See what promotions banks are offering. Economists at ASB see the change in wording, and new OCR track, as signs the central bank is moving further away from another potential rate cut, and towards future rate rises. After sitting at 0.25 percent for months during the pandemic, a series of consecutive 25 basis point increases since October last year has seen the OCR reach 1 percent and it's widely anticipated to continue to rise, likely meaning a jump in interest rates. We think that's fair, because your organisation is benefiting from using our news resources. new rule for the release dates of MPS and OCR decisions, The multi-million dollar public broadcasting merger is set to be finalised by mid-2023 - before. Squirrel Mortgages has a Shopper Approved rating of 4.7/5 based on 1762 ratings and reviews. If youve taken the time to make sure you are in the right fund or investment to meet your goals, you shouldnt need to change your strategy. Analysts at CoreLogic said the outlook for interest rates remained stable for now, but borrowers may look to lock in longer-term rates, amid a growing expectation of higher interest rates in the next 18 months. To view our disclosure statements and other legal information, please visit our Legal Agreements page here. Only a significant drop in inflation would avoid an increase in the OCR. With earnings season in full swing, it might be easy to forget the Reserve Bankis also scheduled to make the first official cash rate (OCR) announcement of the new year this week. release of each MPS at 3pm and FSR at 11am. There was even talk of it going into the totally uncharted territory of a negative rate, as we have seen in Europe and Japan. Credits: Video - Newshub; Image- Getty Images. For a few months back in 2020, economists were warning the OCR could go to the unprecedented rate of zero. website. If rates rise, savings accounts rates could increase as well. In return, we'll give your team access to pro news tools and keep Scoop free for personal use, because we believe public access to news is important! below. Nikko Asset Management head of equities Stu Williams speaks with Kate McVicar. implementation of the OCR will continue to be the working The current forecast says the Official Cash Rate (OCR) could peak as high as 5.5% as the RBNZ continues its battle against rampant inflation, which would mean weve got another 1.25% to climb from the current level. Market implementation of the OCR will continue to be the working day after the monetary policy announcement. As the economy has recovered, the need for extremely low interest rates has reduced, and the process of raising the OCR has begun. You can also search our past events. Interest rates will need to remain high for a time until inflation is clearly back on a path towards the target. Currently the OCR sits at 2.5% after the Reserve Bank's last announcement on July 13. ads. Finder ROW Pty Ltd (ABN 38 624 431 750) provides factual information on and compares many, but not all, products and services. The New Zealand dollar jumped more than half a US cent, breaking through US$0.70 within minutes of the announcement. Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search. "For now, we are sticking to our call for a sequential path of 25bp hikes and a 2.75 percent early 2023 OCR peak. Squirrel shall not be liable or responsible for any information, omissions, or errors present. We may also receive compensation if you click on certain links posted on our site. It said commentators are on the fence over how big the jump will be but is opting for 25 basis points with the expectation the Reserve Bank will "deliver an upfront assessment reiterating that the tightening cycle is still in its early stages, that follow-up 50 basis point hikes (notably in May) are still possible and that the OCR will need to move above neutral levels to achieve the RBNZs objectives". How strong they will be depends on the RBNZ's assessment on inflation developments, so we might see a slowing down in the magnitude of the increases, but increases are still on the agenda. Financial Stability Reports (FSR). If they dont pass on the full rate cut, ask for a rate discount, and if youre still not happy start comparing what other deals are in the market. Copyright 1996-2023 KM Business Information NZ, Hike it like it's hot: RBNZ expected to lift rates by historic 75 bps, Reserve Bank makes its September rate call, Avanti Finance named best non-bank at the NZMAs, Kiwibank: Strong demand for labour remains, but will wane as the economy slows, FinPOWER appoints Australian general manager. The RBNZ needs to be mindful of how quickly they went up as we navigate the impact of existing changes still washing through, Bolton said. The hardest thing in the world to understand is the income tax. It's predicting a 50 basis point increase, which would be the largest increase to the OCR since May 2000. The OCR has been steadily increasing since October last year in an ongoing bid to tackle inflation of 7.3%. With earnings season in full swing, it might be easy to forget the Reserve Bank is also scheduled to make the first official cash rate (OCR) announcement of the new year this week. As mentioned above, you still might want to monitor other deals in the market to keep informed.If the rate risesIf rates rise, savings accounts rates could increase as well. ASB expects more OCR increases over the year ahead; we think the OCR will rise from its new setting of 0.5%, to 1.5% by the end of 2022. Official Cash Rate (OCR) decisions, and the six-monthly ANZ's Business Outlook in March found inflation could be "moon-bound" given that nearly all surveyed businesses expected higher costs in the coming months, which flows on to increases in prices for consumers. While we share the RBNZs view that the OCR will move up in 2022, their pace of hikes over the next few years is larger than what we envisage.". Both ASB and ANZ believe the OCR will begin to rise from August 2022. I think enough is done already as inflation will begin to ease. "The Reserve Bank is between something of a rock and a hard place," ANZ said in its report. Meanwhile, ASB is forecasting a more cautious 25 basis point jump, but isn't ruling out the possibility of a larger increase. RBA opts for a pause, Higher oil prices drive global rates higher but reversal follows after weak US ISM manufacturing report; net change in yields is lower. Last month Stats NZ announced that food prices rose 6.6% on last year. Currently the OCR sits at 2.5% after the Reserve Bank's last announcement on July 13. release dates are:Monetary Policy Statement / "Inflation is far too high. A move to 3% today would be a seven year high. But now theyve set us firmly on track for a recession, and with more and more Kiwi cutting back on their discretionary spending in order to survive higher rates, the sense across the market is that it wont need to get that far before the economy is brought under control. August, and November. OCR - Usually In its preview of the decision, ANZ said the Reserve Bank needed to make a big move to "rein in runaway inflation" and the "sooner they rip into it, the lower the economic cost is likely to be". If your fixed-rate mortgage is to end soon, start comparing what deals are on offer, so you dont find yourself scrambling to lock in another rate.If the rate gets cutIf you feel your mortgage is no longer competitive, you might want to obtain a quote from your lender to find out possible exit costs. As mentioned above, you still might want to monitor other deals in the market to keep informed. Market The release dates in full for the period until July 2022 are: in principle, around two weeks later compared with the These types of changes are always considered by investment managers. Buying your first home, next home, investing in property or just keen to review your mortgage? These are the rates banks pay to raise money in the wholesale markets, which when combined with term deposits, provide the majority of funding for home loans. OCR announcement dates for 2023 After a period of much-needed respite over the holiday break, the RBNZ will be back to its regularly scheduled programming from late February. releasing its quarterly Monetary Policy Statements (MPS), That's far beyond the Reserve Bank's objective of keeping inflation between 1 and 3 percent on average while also supporting maximum sustainable employment. "In regards to the property market, the prospect of a stable official cash rate for at least the next year or so suggests no major upwards pressure on mortgage rates until the second half of 2022 although of course global financial market shifts can have a significant influence too, as well as upside inflation surprises within NZ. Reuters surveyed 23 economists ahead of the RBNZ's Wednesday's cash rate announcement, with more than 60% expecting a 75 basis-point hike, taking the OCR to 4.25%. NZ curve flattens; market sees a good chance of easier policy in the second half, when the economy is likely to be deeper in recession. The Reserve Bank often leave it on hold, as we have seen at each meeting since March last year. One of the biggest challenges for people is the inflation rate. With the return of LVR restrictions, a rapidly improving economy, and further adjustments to investor lending restrictions, ASB economists stated in the latest Home Loan Rate Report that they expect the RBNZ to start raising the OCR from its record-low setting of 0.25% in November 2021 with an OCR peak of 1.5% in late 2023 or early 2024.
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