OCR remains unchanged at 3.25% at July 9th 2025 RBNZ announcement
The Reserve Bank of NZ (RBNZ), as widely predicted, has retained the current 3.25% Official Cash Rate (OCR) as did Australia hold theirs yesterday citing uncertain geopolitical factors as trade tariff impact rushes through the world rendering a wait and see approach prudent. With inflation figures due out in August and expected to be in the upper regions of the 1-3 percent target band, its generally accepted that cuts will ensue in later announcements throughout the year as headline inflation continues to ease.
With many OCR reductions having already taken place over the last year, we’re nearing the neutral rate where the OCR will rest at around 3 to 2.75 percent expected by the end of the year with interest rates following so we’re about half a percent away from where we will end up for the year.
Click here to see the full RBNZ report.
Taking a peek back further we can see the driver for OCR increases starting in Oct 2021 after 19 months at 0.25% going back to March 2020, ( cue Covid lockdown 1 ) was inflation taking off and peaking at 7.2% in July 2022 so with 12 OCR increases in 20 months starting in Oct 2021, it reached its peak at 5.5% in May 23 where it sat for 15 months finally starting to reduce in Aug 24 with inflation down to 3.3%. Since then and with inflation now in the target 1% - 3% range, the OCR has eased 6 times in 9 months to settle at 3.25% in May 2025.
So NOW, we have a standoff with inflation bubbling in the mid to high 2’s and geopolitical factors and yo-yo tariffs knocking all sense out of everything biting at the heels of every decent economy, the wait and see approach may continue for a bit longer with expectation of 3% to 2.75% OCR by the end of the year as mentioned earlier. Rest assured we’re near the final resting place of the OCR with the major moves down all done and just a few tweaks to go.
Click here to view the RBNZ historical data on the OCR.
Interestingly since the OCR’s inception in March 1999 where it sat for most of that year at 4.5%, it then increased from 2000 through 6’s and 7’s to peak at 8.25% in July 2007 for the 11 months to June 2008 to take the heat out of the then rampant property market, dropping to 3.5% in Jan 2009 to stimulate the economy out of the 08 GFC where its remained in the 3% - 2.5% arena with the longest stretch at 2.5% of 34 months from March 2011 - Jan 2014 dropping to 1.75% in Nov 2016 to March 2019 a total of 28 months, then further easing to 1.0% through to Feb 2020 then boom … Covid … and the rest is relayed above.
So we’ve had it a lot worse and with the OCR under 3% for the most part for the 12 years since 2008 to 2020 … then with a bump of craziness for five years, it appears we’re back close to the 2.5% - 3% neutral rate of neither restrictive or stimulative which is a good place to be.
Next OCR announcement 2pm Wed 20th Aug
