ASB has cut a number of its fixed-term home loan rates.<\/p>\n
Its six-month rate will drop by 10 basis points, from 4.95% to 4.85%. Its 18-month rate will drop by four basis points, to 4.45%.<\/p>\n
The two-year rate drops to 4.49% and the three-year to 5.79%. The four-year rate falls to 5.09% and the give-year to 5.15%.<\/p>\n
The latest consumer price index update showed inflation was hitting the top of the Reserve Bank’s target band, with a 3% year-on-year rise.<\/p>\n
But economists did not expect it to alter the direction of interest rates, at least in the near term.<\/p>\n
Kiwibank’s economists said the result was in line with the Reserve Bank’s forecast.<\/p>\n
“The move to 3% is unwanted. But it shouldn’t stand in the way of the Reserve Bank delivering further rate cuts. They should take comfort in underlying inflation which remains subdued.<\/p>\n
“Core measures of inflation strip out the volatile price movements. And encouragingly, core inflation fell from 2.7% to 2.5% – still within the Reserve Bank’s target band and the lowest since March 2021. It is the Reserve Bank’s job to look through volatile movements in inflation, and set policy for late next year. And in 2026, inflation is set to slow below the mid-point of the target band. We continue to expect a move to 2.25% in the cash rate next month.”<\/p>\n
HSBC economists agreed.<\/p>\n
“The New Zealand economy appears to have ample spare capacity, which likely aided in reducing underlying inflation pressure, and which we see as likely to see further disinflation emerge,” chief economist Paul Bloxham said.<\/p>\n
“Our central case sees the Reserve Bank cut by 25bp in November. The combination of weak economic activity, easing underlying inflation and still-soggy jobs market leaves little standing in the way of the Reserve Bank delivering further easing. We see this as enough to support a growth upswing in 2026.”<\/p>\n
ANZ economists said the Reserve Bank had acknowledged that a lift in inflation was likely.<\/p>\n
“Clearly the high frequency data and inflation expectations are a must-watch between now and the November monetary policy statement, but today’s data certainly don’t present any challenge to the Reserve Bank’s August forecast: underlying inflation is slowing largely as forecast. We continue to expect a 25bp cut in November.”<\/p>\n