Positive Reserve Bank Outlook Highlights Economic Improvement

Finance Minister Nicola Willis says families and businesses in New Zealand are likely to welcome the Reserve Bank’s positive outlook for 2026, following another reduction in the Official Cash Rate.

The Reserve Bank lowered the Official Cash Rate by 25 basis points to 2.25 per cent. This marks the ninth reduction since the rate reached 5.5 per cent in July 2024.

Nicola Willis said the previous cuts to the Official Cash Rate are contributing to stronger economic activity. She noted that the bank is projecting decreasing inflation and increasing growth, with its forecasts aligning with widespread expectations of an improving economy.

According to her, lower interest rates are providing more options for households. She highlighted that Reserve Bank data indicates 80 per cent of mortgage lending has been renewed since the bank started reducing the Official Cash Rate in August of the previous year.

She said this shift is leaving more disposable income with households. She added that many New Zealanders are using the lower rates to purchase their first homes. In the 12 months to September, 23,600 households bought their first home, the highest figure recorded since 2021.

Nicola Willis said New Zealanders have faced difficult years but added that conditions are improving.