Economists expect more RBNZ easing despite 3% inflation
ASB has lowered several fixed-term mortgage rates as competition intensifies following the Reserve Bank’s 0.5% official cash rate (OCR) cut earlier this month – the largest move since 2020.
The bank’s six-month rate has dropped by 10 basis points from 4.95% to 4.85%, while its 18-month rate fell by four basis points to 4.45%. The two-year rate now sits at 4.49%, the three-year at 5.79%, the four-year at 5.09%, and the five-year at 5.15%, RNZ reported.
The repricing follows ANZ’s move to cut home loan and term-deposit rates after the OCR reduction, positioning New Zealand’s largest mortgage lender competitively across most fixed terms.
Inflation steady at 3%, easing pressure on RBNZ
Economists say the result aligns with forecasts and should not disrupt the Reserve Bank’s current easing path.
“The move to 3% is unwanted,” Kiwibank economists said. “But it shouldn’t stand in the way of the Reserve Bank delivering further rate cuts. They should take comfort in underlying inflation which remains subdued.”
They noted that core inflation fell from 2.7% to 2.5%, the lowest since March 2021, and expect the RBNZ to cut the OCR to 2.25% next month.
HSBC and ANZ back further easing
HSBC chief economist Paul Bloxham said New Zealand’s economy still has “ample spare capacity,” aiding disinflation.
“Our central case sees the Reserve Bank cut by 25 bp in November. The combination of weak economic activity, easing underlying inflation and a still-soggy jobs market leaves little standing in the way of the Reserve Bank delivering further easing.”
ANZ economists agreed that underlying inflation continues to slow as expected, reaffirming their call for a 25 bp cut in November.
CCCFA backdrop: ASB settles class action
The rate cuts also come as ASB agreed to a $135.6 million settlement to resolve claims in the Banking Class Action, which alleged breaches of disclosure obligations under the Credit Contracts and Consumer Finance Act (CCCFA).
The settlement, reached without ASB admitting liability and still subject to court approval, ends four years of litigation.
Lawyer Scott Russell, representing the plaintiffs, said the outcome “provides certainty” and avoids the risks associated with the government’s proposed retrospective CCCFA amendment.
The case against ANZ continues, leaving ANZ as the only major bank still facing active litigation over alleged disclosure breaches.
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