Official Cash Rate Raised to 3%

Today the Official Cash Rate was raised to 3%.  The Reserve Bank Governor noted..

“In New Zealand, domestic demand is subdued. Households are cautious, with retail spending growing only modestly, housing turnover in decline and household credit growth weak. While this caution has been evident for some time, the recent slowing in net immigration will act to further dampen consumer spending. Business investment remains very low, with corporate lending continuing to be subdued.”

Slowing net immigration is also likely to have negative affect on the housing market.

He also noted that the pace and extent of further raises may be more moderate than previously indicated.

This means there could be a pause in OCR raises rather than straight line upward raises.

Generally speaking we are, and have been for some time, pretty comfortable sitting either on a floating interest rate or simply rolling over a 6 month fixed interest rate.