Our latest GDP figures might’ve been in the black — if only just — but a lot of the economic data we’ve seen in the weeks since has continued to paint a picture of a country that’s undoubtedly in recession.
Recent Ministry of Social Development data shows the number of job seekers receiving government support is climbing at pace, and new predictions out of ANZ are that up to 40,000 more people will be out of work by the end of the year.
As a result, we’re starting to see more and more economists calling on the Reserve Bank to drop the Official Cash Rate sometime before the end of the year.
It marks a pretty significant change in tune for large parts of the market. Up until very recently, many had been picking mid-2025 as the point when interest rates would likely start coming down again.
Now, the widespread expectation is that the RBNZ could move to cut interest rates in November — potentially by as much as 0.5% — or, if not then, then certainly in February 2025, at its first OCR announcement of the year.
Even if the RBNZ’s thinking around the future of interest rates is changing, it probably won’t tell us as much at next week’s OCR announcement
If history’s anything to go by, the RBNZ will talk interest rates up until the very moment it announces it’s going to drop them.
That said, you can reasonably expect that it will acknowledge all the weak economic data that’s been coming through lately, and the impact that’s having for Kiwi, and our economy.
The big announcement to watch for will be the one in August — where signs may start to come through that relief could be on the cards earlier than previously indicated.
In terms of interest rates, most borrowers are still favouring six- and 12-month terms — where rates are sitting just under 6.9%
And that would be very much the recommended approach for anyone looking to fix, or refix, their mortgage in the coming weeks — depending on your personal circumstances.
One-year terms in particular should comfortably see you through to such a time where interest rates have started to come down again.
There are still some fantastic cashback offers out there for anyone taking out a new loan, or switching lenders, as well.
__Check in again next week for our post-OCR update on what’s happening with interest rates. __
