The Official Cash Rate has been dropped by the Reserve Bank for the first time in five years.
Dr Alan Bollard has announced it is being dropped by 0.25 percent to 8 percent.
In his statement released this morning, Dr Bollard said “more unpleasant international news has emerged since the June Monetary Policy Statement, and there is a risk that the domestic economy will slow further. Moreover, the cost of funds raised abroad by banks has been rising in recent months as the international financial situation has deteriorated. Today’s cut will help to mitigate the effect of these increases on the actual borrowing costs paid by firms and households.”
He has also hinted at further cuts to possibly come by saying that “Consistent with the Policy Targets Agreement, the Bank’s focus will remain on medium-term inflation. In this regard, it is important to note that monetary policy has been reasonably tight for some time, and is now restraining activity and medium-term inflation pressures. Provided that the outlook for inflation continues to improve and there is no excessive exchange rate depreciation, we would expect to lower the OCR further.”
Although I have been reading a few online forums and that from this news break. And many people are saying that this is just going to be another election year bribe. But for what ever reason it will definately have an impact on home buyers. With the ASB Bank already reducing their interest rates to 8.95% for two years. NO other banks have moved yet.
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yea, it sound’s splendid.. if only we were not heading into a recession in 2008 – 2009