The Reserve Bank of New Zealand (RBNZ) has delivered its third large Official Cash Rate (OCR) cut in a row and has signalled more OCR reductions this year to revive economic growth.

 The central bank lowered the OCR by 50 basis points from 4.25% to 3.75% on Wednesday 19 February with the bank’s Monetary Policy Committee saying that if economic conditions continue to evolve as projected, there was scope to lower the OCR further through 2025. 

 “Economic activity in New Zealand remains subdued. With spare productive capacity, domestic inflation pressures continue to ease. Price and wage setting behaviours are adapting to a low-inflation environment. The price of imports has fallen, also contributing to lower headline inflation.

 “The economic outlook remains consistent with inflation remaining in the [bank’s 1-3% target] band over the medium term, giving the Committee confidence to continue lowering the OCR,” the RBNZ said in a statement.

 The central bank has now delivered a cumulative 175 bps of cuts since August last year that have helped to lower inflation to 2.2%, close to the midpoint of the central bank’s target band. 

 The latest 50 bps cut will be welcome relief for households with mortgages looking forward to lowering their interest rate burden this year, said Angus Raine, Executive Chairman, Raine & Horne. 

 Meanwhile, CoreLogic NZ Chief Property Economist, Kelvin Davidson has reported that the recent stability in property values at the national level could be a sign that a rebound in prices could be taking shape.

 Since the ‘mini downturn’ seen through the middle part of last year petered out in August, national property values have been in a holding pattern - not moving clearly in either direction.

 “But with mortgage rates having dropped significantly from their peaks, property sales volumes have continued to rise in recent months and may well start to reduce the available stock of listings on the market in the near term.”

 Whether you want to rent, let, sell or buy a property, don’t hesitate to contact your local Raine & Horne office.