Finance Minister Hails OCR Cut, Easing Pressure on Kiwi Households and Businesses

Today’s 50 basis point Official Cash Rate reduction will further ease pressure on Kiwi households and businesses, Finance Minister Nicola Willis says.

Today’s Official Cash Rate (OCR) shows monetary policy doing its job. The reduction will be welcome news to mortgage-holders and businesses, as OCR drops flow through to interest rates.

Falling interest rates are good news for growth, jobs, and investment. It also means more money in the hands of families with mortgages.

Today’s decision means the OCR has now dropped from 5.5 per cent to 2.5 per cent in just over a year - a significant shift that is taking some of the edge off a very challenging economic recovery.

Assuming today’s reduction is passed on in full, minimum repayments for a family with a 25-year, $500,000 mortgage will be more than $400 less a fortnight than they were in the middle of last year.

The Government acted swiftly to refocus the Reserve Bank on addressing inflation. Inflation has now been within the Reserve Bank’s target band of 1 per cent to 3 per cent for four consecutive quarters.

We also stopped wasteful spending, which aside from squandering hard-earned tax dollars, also overheated the economy.

But we know many New Zealanders are still doing it tough. That’s why the Government remains focused on responsible economic management that supports recovery while delivering the public services New Zealanders expect.

Lower interest rates are part of the picture - but we’re also a reforming Government driving policies that support job and income growth, ensuring every Kiwi has the opportunity to get ahead.