Two important announcements. One big question: where are interest rates heading next?
New Zealand’s latest inflation figures announced on 22nd October have provided an important update for households and businesses. Annual inflation eased to 3.7% in the September 2026 quarter, down from 4.1% in the June quarter, according to the latest figures reported by the Reserve Bank of New Zealand. While this is an improvement, inflation remains above the Reserve Bank’s target range of 1% to 3%.
The next key date is Wednesday 28 October at 2pm, when the Reserve Bank announces its next Official Cash Rate (OCR) decision. For homeowners, first-home buyers, property investors and business owners, the result could provide further clues about the direction of borrowing costs.
What is CPI, and why does it matter?
The Consumer Price Index (CPI) measures how the prices of everyday goods and services change over time. When inflation is high, household budgets come under pressure and businesses face rising costs.
The Reserve Bank aims to keep inflation between 1% and 3% on average over the medium term. If inflation remains too high, it may keep monetary policy tighter for longer or increase the OCR to help slow spending and reduce price pressures. If inflation eases sustainably, the Bank may have more room to reduce the OCR.
The latest fall from 4.1% to 3.7% is encouraging, but it does not automatically mean interest rates will fall. The Reserve Bank also considers underlying inflation, employment, economic growth, fuel prices and the outlook for future prices.
How could the announcements affect interest rates?
If inflation remains higher than expected, financial markets may anticipate tighter monetary policy, potentially putting upward pressure on some interest rates. A lower-than-expected result could have the opposite effect, depending on the wider economic picture.
Floating mortgage rates are generally more directly affected by changes in bank funding costs and the OCR. Fixed mortgage rates, meanwhile, are influenced by wholesale funding rates and expectations about future interest rates. This means fixed rates can move before an OCR announcement, and an OCR change does not automatically produce an equivalent change in every mortgage rate.
Business borrowers should also keep an eye on equipment finance, working capital facilities and upcoming loan reviews. Changes in borrowing costs can affect cash flow, repayments and decisions about investing in vehicles, machinery or business expansion.
What should you do now?
Rather than trying to predict every market movement, use these announcements as an opportunity to review your financial position.
Consider when your mortgage is due to refix, whether your current loan structure suits your circumstances, and how your repayments would look if interest rates changed. Business owners may also benefit from reviewing cash flow, existing debt and future funding requirements.
At Infinance, we help clients make informed decisions across finance, mortgages and insurance. If you are considering a new loan, refinancing or reviewing your existing arrangements, get in touch with Infinance to discuss your options.
Because the right financial structure is about more than simply chasing the lowest advertised rate.
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