NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Economy / Official Cash Rate

All banks drop interest rates after OCR move

Herald online
4 Dec, 2008 05:11 AM6 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Alan Bollard announcing the 1.5pc cut today. Images / Mark Mitchell, Christoph Lukasser

Alan Bollard announcing the 1.5pc cut today. Images / Mark Mitchell, Christoph Lukasser

KEY POINTS:

New Zealand's banks have been told to pass on the benefits of today's record 1.5 percentage point cut in official interest rates.

Making his move this morning, Reserve Bank governor Alan Bollard made it clear the bank wants today's cut to make its way to consumers. He pointed
out that profit margins for the banks were stable or growing.

"To ensure the response we are seeking, we expect financial institutions to play their part in the economic adjustment process by passing on lower wholesale interest rates to their customers," he said.

ASB Bank, Kiwibank, Westpac, BNZ, SBS Bank (formerly the Southland Building Society) and ANZ National have responded to today's cut by reducing their interest rates.

ASB has cut its variable rate from 8.7 per cent to 7.95 per cent, while SBS has cut from 9.15 per cent to 7.2 per cent.

Kiwibank today cut its floating rate from 7.95 per cent to 7.45 per cent, its six month rate from 7.49 to 6.99 per cent, its one year fixed term 6.99 per cent to 6.49 and its 2 year rate from 7.59 to 7.19.

Westpac has left its floating rate unchanged, but has today moved to cut its fixed terms.

Its six month term has fallen 0.25 per cent to 7.1 per cent, while its one year rates have fallen by 0.5 per cent to 6.8 per cent. Heading further out, its rates have been cut by between 0.4 per cent and 0.55 per cent.

Westpac is pointing out that its most recent cuts on November 20 applied to more than just its mortgages, with credit card, business and agriculture rates also falling& "rates that other banks have yet to address".

"We have noted the Reserve Bank Governor's comments and restate our commitment to passing on to our customers the benefits of reductions to our cost of funds as we are able. We continue to review all rates on an ongoing basis," said a bank spokesman.

BNZ has cut its six month mortgage rates by 0.5 per cent, moving from 6.99 per cent to 6.49 per cent. Rates on its 'totalmoney' product are coming down from 8.29 per cent to 7.75 per cent.

ANZ and National have made cuts across the board, cutting fixed term rates as much as 0.66 per cent and their variable rates half a per cent.

Asked about the need for an explicit statement asking the banks to pass on the rate cuts, Bollard said: "Because obviously we are cutting monetary policy for a purpose - we want that to result in easing monetary conditions through the economy - we want that to be reflected in interest rate reductions both for the corporate sector and the household sector both of which have been quite constrained recently."

Asked if the banks had been grudging in their passing on of previous cuts, Bollard said there had been cuts in rates after the October OCR cut.

"So far, we've seen much if perhaps not all of the 100 basis point cuts we did in October being passed through. We've seen some discussion by banks they might have pre-empted some of that and indeed pre-empted some of today's [cuts] - well, that really depends on where you start your calculations from."

"But we also do observe that margins have stayed quite high - and indeed grown in the banking sector - it's not an easy time in the banking sector at the minute, but it's a time through these economies where really all the institutions need to share both some of the pain and some of the need to pass on easier conditions."

Bollard will be hoping that a cut in mortgage rates, along with recent tax cuts and falling fuel prices, will help stimulate an economy that is in recession.

The OCR now stands at 5 per cent. The equivalent rate in Australia is 4.25 per cent, in the UK it is 3 per cent and it is just one per cent in the US.

A cut of this scale would have been unimaginable just 12 months ago, but the past year has been one that few but the gloomiest of pessimists could have expected. The previous OCR was 6.5 per cent.

A 1.5 percentage point cut is the biggest since the OCR was introduced in 1999. It follows on from the previous record cut - one percentage point - in October this year. The OCR has not been this low since December 2003.

Finance Minister Bill English said the rate cut would help stimulate the recession-hit economy.

"The drop in interest rates alongside the significant tax cuts in the government's stimulus program mean that we will take the hard edge off the recession." he told The Associated Press.

"It will be some time before the economy gets going again but we would hope the worst scenarios of sharply rising unemployment won't occur - but it's still going to be a tough time," he added.

Current data suggested the economy was "bouncing along the bottom of a shallow recession" rather than being "headed for something sharp," English noted.

Bollard said this morning that "ongoing financial market turmoil and the marked deterioration in the outlook for global growth have played a large role in shaping today's decision".

He said: "Activity in most of our trading partners is now expected to contract or grow only very slowly over the next few quarters.

"Economic activity in New Zealand will be further constrained as a result, compared with our view in October."

Inflation was abating in New Zealand and overseas as a consequence of these developments, so the bank now had more confidence that it would return "comfortably" inside the target band of 1 to 3 per cent some time in the first half of next year.

"However, we still have concerns that domestically generated inflation (particularly local body rates and electricity prices) is remaining stubbornly high," Bollard said.

The next scheduled OCR announcement is on Thursday, January 29.

- HERALD ONLINE/ NZPA

See more details of Reserve Bank announcement here.

A history of the OCR.

Discover more

Opinion

Has Alan Bollard done the right thing?

23 Jul 09:07 PM
Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.
Save

    Share this article

Latest from Official Cash Rate

Economy|official cash rate

'Least upbeat': Construction sector struggles as demand weakens

01 Jul 12:41 AM
Premium
Opinion

Liam Dann: Never mind the swear words, our politicians need to raise the quality of debate

28 Jun 05:00 PM
Premium
Opinion

Liam Dann: The upside to this painfully slow economic recovery

22 Jun 07:00 AM

There’s more to Hawai‘i than beaches and buffets – here’s how to see it differently

sponsored
Advertisement
Advertise with NZME.

Latest from Official Cash Rate

'Least upbeat': Construction sector struggles as demand weakens

'Least upbeat': Construction sector struggles as demand weakens

01 Jul 12:41 AM

But the retail sector is optimistic, with 40% expecting better conditions soon.

Premium
Liam Dann: Never mind the swear words, our politicians need to raise the quality of debate

Liam Dann: Never mind the swear words, our politicians need to raise the quality of debate

28 Jun 05:00 PM
Premium
Liam Dann: The upside to this painfully slow economic recovery

Liam Dann: The upside to this painfully slow economic recovery

22 Jun 07:00 AM
Premium
Reserve Bank blocks media from talk by OCR committee member Prasanna Gai

Reserve Bank blocks media from talk by OCR committee member Prasanna Gai

15 Jun 08:32 PM
From early mornings to easy living
sponsored

From early mornings to easy living

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP