RBNZ Cuts OCR to 3.00%, Signals Further Easing Ahead
August 2025
The Reserve Bank of New Zealand (RBNZ) has reduced the Official Cash Rate (OCR) by 25 basis points to 3.00%, continuing its easing cycle that began in mid-2024. This decision reflects the central bank’s response to subdued domestic activity, rising unemployment, and declining inflationary pressures.
Notably, the Monetary Policy Committee (MPC) vote was split: two members advocated for a more aggressive 50 basis point cut, while the remaining four opted for the more measured 25 basis point reduction. This divergence highlights the growing urgency among some policymakers to stimulate the economy more decisively.
The RBNZ’s updated interest rate forecast now suggests the OCR could fall to 2.50% by February 2026, a more dovish trajectory than previously projected. This reflects expectations that headline inflation—currently at 2.7%—will return to the 2% midpoint of the target band by mid-2026, supported by significant spare capacity in the economy and easing domestic price pressures.
Wholesale interest rates have responded accordingly, with 1–2 year swap rates currently coming off to now starting with a ‘2’, presenting a timely opportunity for syndicates to lock in tranches of debt through strategic interest rate hedging. This is especially relevant for those with treasury policies designed to balance fixed and floating exposures.
At Mackersy Property, we continue to engage closely with our lending partners to renegotiate bank margins and optimise debt structures. These efforts, combined with easing wholesale rates, are expected to deliver continued interest rate relief for investors. The outlook remains cautiously optimistic, with monetary policy easing and inflation expectations stabilising, we are well-positioned to take advantage of the evolving rate environment. We will continue to monitor future OCR announcements closely and will continue to position our syndicates to benefit from these developments.
- Mick Pannett, Treasury & Finance Manager
Notably, the Monetary Policy Committee (MPC) vote was split: two members advocated for a more aggressive 50 basis point cut, while the remaining four opted for the more measured 25 basis point reduction. This divergence highlights the growing urgency among some policymakers to stimulate the economy more decisively.
The RBNZ’s updated interest rate forecast now suggests the OCR could fall to 2.50% by February 2026, a more dovish trajectory than previously projected. This reflects expectations that headline inflation—currently at 2.7%—will return to the 2% midpoint of the target band by mid-2026, supported by significant spare capacity in the economy and easing domestic price pressures.
Wholesale interest rates have responded accordingly, with 1–2 year swap rates currently coming off to now starting with a ‘2’, presenting a timely opportunity for syndicates to lock in tranches of debt through strategic interest rate hedging. This is especially relevant for those with treasury policies designed to balance fixed and floating exposures.
At Mackersy Property, we continue to engage closely with our lending partners to renegotiate bank margins and optimise debt structures. These efforts, combined with easing wholesale rates, are expected to deliver continued interest rate relief for investors. The outlook remains cautiously optimistic, with monetary policy easing and inflation expectations stabilising, we are well-positioned to take advantage of the evolving rate environment. We will continue to monitor future OCR announcements closely and will continue to position our syndicates to benefit from these developments.
- Mick Pannett, Treasury & Finance Manager