Raine & Horne Rotorua
R&H
You are viewing an article that is not currently active

RBNZ continues fight against inflation with an 11th straight hike

April 5, 2023

The Reserve Bank of New Zealand (RBNZ) has taken another step in the fight against inflation with a record 11th straight hike of the official cash rate (OCR) this week.

From a record low of 0.25%, the OCR now sits at 5.25%.

According to Keith Niederer, NZ Network Manager, Raine & Horne, the central bank has been pursuing an inflation-fighting path since October 2021, when it announced the first rise of the most extended tightening cycle in its history.

“We were anticipating a 25 basis point rise so for the OCR to land this month at 5.25% was a little unexpected.”

Headline inflation in New Zealand is at 7.2%, with new Q1 2023 data due later in the month. “We are expecting higher fuel prices will add extra pressure on under-siege property owners, business owners and consumers,” Keith said.

“Higher interest rates are now actively working to slow the economy, but the fight against inflation still has a way to go.”

The latest hike takes the OCR to its highest point since 2008 with the RBNZ forecasting the OCR will peak at 5.5%, but some banks believe the ceiling could be 5.25%.

Looking ahead, the RBNZ’s Monetary Policy Committee is expecting a continued slowing in domestic demand and a moderation in core inflation and inflation expectations. The extent of this moderation will determine the direction of future monetary policy.

For real estate markets across New Zealand, Keith said vendors are still listing properties, and buyers are still attending open for inspections despite higher interest rates.

“There is still activity in many markets, but it is down on the levels we recorded before the latest upward cycle in monetary policy.”

Keith said, “It is very pleasing to see that the central bank in Australia has pushed pause on rate rises and that some banks here are now predicting that the OCR will rest at 5.25%, which we have now reached.”

 

For those considering a real estate sale before winter, Keith encouraged them to get the right advice and to seek out real estate agents who will deliver the best results.

 

“A property is a major asset and it’s important that vendors achieve the best result possible, and this means working with an experienced real estate group such as Raine & Horne.”