Official Cash Rate Unchanged

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent. Reserve Bank Governor Alan Bollard noted that sustained strength in the New Zealand dollar would reduce the need for future increases in the OCR and stated “Given the medium-term outlook for inflation, it remains prudent to hold the OCR at 2.5 percent.”

Swap rates have hardly moved with the 1 year swap at the time of writing down by 0.01 to 2.81% and the 2 year at 3.01%, down 3 basis points. The NZ$ has dropped a tad but that was probably the intention.

The word around the traps is that a couple of banks are very keen on getting new business on board. Sighted was a 2 year home loan fixed interest rate quoted at 5.29%. This with a legal fee contribution of $2,000 which is historically high for what was not a particularly large loan amount.