Will the Reserve Bank deliver OCR cut to ease of cost of living?

This is a transcript from Will's Word on 9th October, 2024:

Now it’s time for Will’s Word…

And all eyes will be on the Reserve Bank this afternoon, as it’s expected to announce whether there’s going to be a change to the Official Cash Rate.

Many economists are hopeful for a drop, with most calling for a 50 basis point cut, which would lower the rate to 4.75%

I’m taking a more conservative view and believe the Reserve Bank will only cut the OCR by 25 basis points, based on its previous behaviour this year.

But nevertheless, whatever the cut ends up being could be a bit of a game-changer for Kiwis struggling with high mortgage costs.

It’s no secret many homeowners are feeling the pinch from rising interest rates. But a further cut in the OCR would lower interest rates on loans, making mortgages a week bit more affordable. It’s important to point out though that this won’t be an immediate fix for homeowners unless they are due to refix sometime soon.

But news flash! A lower OCR could also help first home buyers achieve their dream of owning a home.

So as the Reserve Bank makes its decision today, I hope I’m wrong and the economists are right – a 50 basis point cut would be incredible, but given the measured and perhaps lagged approach the Central Bank has taken this past year I’m not holding my breath.

That’s Will’s Word.