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Faster Economic Impact Expected from Falling Interest Rates, Says RBNZs Silk

Aug 15, 2024

Falling interest rates should influence New Zealand's economy more quickly than in previous cycles, according to RBNZ assistant governor Karen Silk. With 70% of mortgages set to be repriced within the next 9-12 months, reductions in mortgage and business lending rates are expected to pass through faster. Although only a third of households have mortgages, they represent 60-65% of household income. RBNZ recently cut the OCR to 5.25% and projects further cuts, anticipating unemployment to peak at 5.4%. While mortgage rates have dropped, they remain restrictive, despite major banks lowering their rates.

 

 

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