- Hon Nicola Willis
Kiwis can look forward to further falls in interest rates following today's Monetary Policy Statement, Finance Minister Nicola Willis says.
The Reserve Bank today reduced the Official Cash Rate (OCR) from 3.5 to 3.25 per cent, the sixth consecutive reduction since August last year.
"A lower OCR means lower interest rates for Kiwi businesses and households. For families, it means more money in the household budget and for first home buyers it makes servicing a mortgage more affordable. For businesses, it means lower borrowing costs and customers with more money to spend.
"Today's announcement shows the work done by the Government to take the pressure off inflation by bringing public spending back under control is continuing to pay dividends.
"In the past nine months the OCR has now fallen 2.25 percentage points with more reductions forecast by the Reserve Bank.
"The impact of this on an individual family will depend on the terms of their mortgage. But, as an example, someone repaying a $500,000 mortgage over 25 years will be more than $300 better off per fortnight if their mortgage rate falls by 2.25 percentage points.
"Our economy is now recovering, but that recovery cannot be taken for granted. Global uncertainty remains high and this presents potential challenges to New Zealand's growth, inflation and interest rate outlook.
"Now, more than ever, the Government must exercise responsible economic and fiscal management. Our recent Budget did just that, with careful initiatives to drive growth while continuing to put the books back in order.
"Kiwi families have paid a heavy price for the previous government's reckless spending. It pushed inflation up to decades-high levels, drove up interest rates, ate away the value of earnings and savings and battered the Government's books.
"Our Government will continue the work to secure economic and fiscal recovery so that New Zealanders can get ahead."
