RBNZ holds the OCR steady – but more cuts could be coming

The Reserve Bank of New Zealand kept the Official Cash Rate (OCR) steady at 3.25% during its July review – marking a pause after six consecutive cuts. While this decision is now well known, it’s the reasoning behind the hold – and what might come next – that matters most to borrowers.

According to Cotality, the hold reflects a cautious approach in response to recent global and domestic inflation pressures. While the Monetary Policy Committee acknowledged softening economic conditions, it opted to wait for more data before cutting again. 

Still, the Committee maintained a downward bias, with another reduction expected as soon as the next announcement.

What borrowers should know

Mortgage rates have already dropped significantly alongside earlier OCR cuts. This has prompted many borrowers to shift from short-term to longer-term fixed rates. 

While the July hold won’t immediately affect most mortgage holders, it does signal a potential turning point – either towards further easing or a longer period of stability.

What to watch for on 20 August

The next OCR review is scheduled for August 20, just one day after the release of the quarterly inflation numbers. That data could heavily influence whether the Reserve Bank cuts again or holds steady.

• If the OCR is cut: Borrowers on variable or near-expiring fixed rates may benefit from renewed rate drops and better refinancing offers.
• If the OCR stays on hold again: Mortgage rates may stabilise, and lenders could become more cautious in pricing and approvals.

Either way, the announcement is likely to shape borrower sentiment for the remainder of 2025.

The next time you encounter clients who are wondering how future OCR changes might affect their borrowing costs or refinancing plans, please ask if they'd like my help.