The OCR and the year ahead.

Written By Kim Manunui

Congratulations NZ, we’ve finally done it!

We’ve shaved 3.25% off the Official Cash Rate (OCR) in nine steps down from 5.5% 15 months ago to settle at 2.25% on 26th Nov to take us through to the next announcement on 18th Feb, the big question on everyone’s lips is ‘where to from here’?

While banks, having since reduced mortgage interest rates and then some slight raising more recently due to wholesale markets volatility might suggest we’ve found the bottom, the general consensus being we’ve done all the major cuts we needed and anything from here is just tweaking, we’ve arrived at our destination … finally!

Cue new Reserve Bank Governor Dr Anna Breman fresh over from Sweden on a 5 year tenure as Reserve Bank Governor as of 1st December and the following comments from one of her statements released 15th Dec.

“We continue to see signs that growth is recovering after having stalled in the middle of this year. The labour market is still weak but is expected to recover as demand in the economy strengthens. We remain confident that annual headline consumer price index inflation will decline towards the 2 per cent target mid-point by the middle of next year.”

Dr Breman reiterated that the forward path for the OCR indicates a slight probability of another rate cut in the near term. “However, if economic conditions evolve as expected the OCR is likely to remain at its current level of 2.25 per cent for some time”.

So there you have it, basically the interest rates we have now will be it or thereabouts for the foreseeable future which brings us in line with where they’ve mostly sat for the last sixty years apart from economic events like the crazy 80’s. While its been a long time coming since its peak in May 23, the worst is behind us and considering the 2008 GFC resulted in the OCR hitting 8.25% we’ve fared better this time around, its been a lot worse.

So brighter days ahead, here’s to an outstanding 2026.

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I was born in Canada, and grew up around Vancouver and the mountains of British Columbia. My love of pristine environments led me to New Zealand and eventually to the mountains, lakes and rivers of the central North Island which is home. My family’s heritage is here, and it’s from here that Korio traverses the planet.

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