The Reserve Bank has cut the official cash rate by 25 basis points to 3.5%.
Today’s decision is the second of 2025 and is the first since Reserve Bank Governor Adrian Orr announced his resignation last month.
The rate is the lowest it’s been since October 2022.
It comes amid turbulent global market conditions, which followed US President Donald Trump’s announcement of sweeping global tariffs last week.
Despite that, economists widely expected the Reserve Bank to make another cut to the OCR.
Inflation sits at 2.2%, within the central bank’s target band of 1 to 3%.
Earlier this week Christian Hawkesby was appointed governor of the Reserve Bank of New Zealand (RBNZ) for a six-month term.
In a statement, the Reserve Bank said as the extent and effect of Trump’s tariff policies become clearer, it has scope to lower the OCR further as appropriate.
“Future policy decisions will be determined by the outlook for inflationary pressure over the medium term.”
It said the global policy response will be an important consideration in gauging the implications of increased tariffs for medium-term inflation in New Zealand. It also noted the recent decline in the New Zealand dollar will help cushion the decreased global demand for New Zealand exports.
Banks move
In reaction to the OCR cut, ASB announced it was dropping interest rates for floating home and business loans, along with savings accounts.
Its housing variable rate was reduced 25 basis points to 6.64%, the orbit variable rate was reduced by 25 basis points to 6.74% and the back my build rate was lowered by 25 basis points to 4.19%.
All savings accounts were lowered by 25 basis points. Changes will be effective from April 16.
Meanwhile, Westpac’s choices floating and choices offset home loan rates will drop by 25 basis points to 6.74%, and its choices everyday advertised revolving rate will drop by 25 basis points to 6.84%.
It said most variable business loan rates will also reduce by the same amount, and announced a 25 basis point cut to interest on savings accounts.
At Kiwibank, variable and offset variable rates were lowered by 25 basis points to 6.50%. Its revolving loan was lowered 25 basis points to 6.55%.
Deposit rates were also lowered by 25 basis points.
ANZ dropped its floating home loan rates by 20 basis points to 6.69%, and flexible loans to 6.80%.
It also reduced its serious saver rate by 20 basis points.
BNZ is also cutting floating rates by 25 basis points. Yesterday it lowered a range of term deposit rates.
Willis reacts
Today’s decision follows global economic uncertainty in the wake of US tariffs. (Source: 1News)
Finance Minister Nicola Willis said the lowered OCR will be good news for businesses and households, with the rate coming down by 200 basis points since August last year.
“For example, for someone with a $500,000 mortgage over 25 years, a two percentage point drop in their interest rate reduces their repayments by about $300 a fortnight.
“The fall in the OCR is also good news for businesses because it means more money flowing through their tills.”
However, Willis warned increasing global uncertainty may “present further challenges” to the economy in the coming months.
“Now more than ever, we need to ensure we get value for every dollar of public money spent.”
Labour criticises economic management
Labour Finance spokesperson Barbara Edmonds said: “While the Reserve Bank is doing its job to cushion the blow of a global economic downturn, Nicola Willis continues to pretend like everything is fine.”
“New Zealanders are rightfully nervous about their jobs, mortgages, and KiwiSaver right now, yet all they’re getting from their Government is ‘we’ve got this.’ That’s not a plan, that’s complacency.”
She said now is the time to be investing in jobs, health and homes to “boost our economy” and lift people up.
“Rather than working to weather the storm, they’re pretending as if it is business as usual.
“New Zealand needs a Government that steps up and adapts when the global system falters, not one that stands still.”
