Banks in New Zealand responded quickly, adjusting interest rates on home loans, business loans and savings accounts. RBNZ shows that the possibility of further cutting OCR based on the impact of tariffs, while the government emphasizes fiscal responsibility. The opposition quickly launched a counterattack, criticizing Christopher Luxon for leading economic management under the prime minister.
Tax rate cuts are also the first major decision of the central bank after the central bank resigned in early March 2025. Christian Hawkesby was recently appointed Governor RBNZ for six months after Orr’s resignation.
“The recent increase in global trade barriers has weakened the prospects for global economic activity. In balance, these developments present downside risks to New Zealand’s economic activity and the outlook for inflation. Leaving consumer price inflation close to the middle of its target band, giving the committee the best position to contribute to the best position for development,” RBNZ’s statement is a statement from RBNZ.
Royal Bank cites the evolving global economic situation, especially in light of the recent tariffs announced by the U.S. president. New Zealand’s current inflation rate is 2.2%, and 1% to 3% within the target range of RBNZ. RBNZ said it has “range that can further reduce OCR when appropriate.”
“As the scope and impact of tariff policies become clearer, the scope of the Commission is designed to lower the OCR. Future policy decisions will depend on the prospects for medium-term inflationary pressures.” The central bank pointed out that the global policy response to tariffs will be a key factor in assessing its impact on New Zealand inflation. The decline in the New Zealand dollar is expected to alleviate the impact of global export demand for New Zealand. Several banks responded to the OCR announcement by adjusting interest rates. ASB lowers its floating home and business loan rates as well as savings account rates. These changes will take effect from April 16.
Westpac also lowered its floating home loan rates, some business loan rates and savings account rates. Kiwibank follows the example, cutting variables, offset variables and revolving loan rates, and deposit rates. ANZ lowered floating home loan rates, flexible loan rates and its serious savings rates. BNZ reduces floating rates and fixed deposit rates.
Finance Minister Nicola Willis said OCR cuts will benefit businesses and families. OCR has decreased by 200 basis points since August of the previous year.
“For example, for people with $500,000 mortgages in 25 years, the interest rate fell by 2 percentage points, reducing their repayments by about $300 every two weeks. The decline in OCR is also good news for businesses, because it means more money flows from their farming.”
Willis also warned that global uncertainty could pose a challenge to New Zealand’s economy. “It is now more than ever to ensure that every dollar spent on public funds is worth.”
Labor finance spokesman Barbara Edmonds criticized the government’s economic management.
“Although the Reserve Bank is working to ease the blow from the global recession, Nicola Willis continues to pretend that everything is good. The New Zealanders are now upset about their work, their mortgages and kiwisaver, but everything they get from the government is “We have got this already.” “That’s not a plan, it’s complacency.”
Edmonds advocates investing in jobs, health and housing to stimulate the economy.
“They didn’t try to avoid the storm, but pretended to be as if it was always the case. New Zealand needs a government that strengthened and adapted when the global system failed, not a stand-alone.”
RBNZ said New Zealand’s economic activity has been carried out as expected. Higher export prices and lower exchange rates enhance primary sector and overall economic growth. The central bank acknowledges that domestic and foreign risks may hinder economic recovery and affect inflation.
RBNZ points out the potential positive and negative impact of tariffs on New Zealand. These include increased trade protectionism, weak exports, weak growth and potentially lower oil prices.
