Advisers weigh in on the latest OCR cut

The Reserve Bank has lowered the official cash rate (OCR) to its lowest level in three years, cutting it by 25 basis points to 2.25 percent in a move aimed at supporting economic recovery.

The new rate marks the lowest OCR setting since June 2022.

Managing Director of Bank of Baroda (New Zealand) Ltd., Sandeep Khaitan, reflected on the decision.

“Today’s cut of the OCR to 2.25% reflects broader macroeconomic trends of easing inflation and subdued growth," he said.

“While this reduction provides near-term support to businesses and households, it also underscores that the economy is still adjusting,” he told The Indian Weekender.

Khaitan added that Bank of Baroda NZ remains committed to balanced, responsible lending.

According to the Reserve Bank’s monetary policy committee, the economic recovery remains uneven and sluggish, but inflation is expected to ease next year, which could allow room for another reduction. The committee had signalled that the cut was anticipated, confirming that the OCR has now reached a three-year low.

Markets and analysts are expected to focus on the central bank’s commentary and forecasts, particularly on how much scope it sees for a further cut next year if conditions require it.

Ajay Kumar, founder & director of Global Finance., NZ’s mortgage  and insurance advisers  welcomed the move.

“The market is slowly picking up, accordingly the New Zealand  economy will start to grow,” Kumar said.

“For the Indian community, especially those looking to buy houses or make investments, the drop in interest rates is good news, as it means lower repayments due to smaller loan instalments than the past when interest rates were higher,” he added.

Recent partial indicators over the past two months have suggested that the economy may be beginning to turn the corner, following a period in which growth had effectively stalled during the first half of the year.