OCR announcement

The Reserve Bank of New Zealand (RBNZ) has announced a 50 basis point cut to the Official Cash Rate (OCR) to 4.75%, effective from Wednesday, August 9, 2023. This is the first time the OCR has been cut since March 2020.

The RBNZ's decision to cut the OCR was widely anticipated by economists, who had been expecting a 50 basis point cut in order to stimulate economic growth. The cut is also in line with the RBNZ's previous guidance that it would be "patient" in raising interest rates.

The OCR is the interest rate that the RBNZ charges banks for overnight loans. A lower OCR means that banks can borrow money more cheaply, which in turn can lead to lower interest rates for businesses and consumers.

The RBNZ's decision to cut the OCR is likely to be welcomed by businesses and consumers, who have been struggling with the rising cost of living. However, it is important to note that the OCR is just one of many factors that affect interest rates, and there is no guarantee that banks will pass on the full 50 basis point cut to their customers.

The RBNZ's next Monetary Policy Statement is scheduled for Thursday, November 8, 2023. At that meeting, the RBNZ will provide an updated assessment of the economic outlook and make a decision on whether or not to change interest rates again.