WELLINGTON (CU)_Following the monetary policy review of the Reserve Bank of New Zealand issued on Wednesday (14 July), some of the top financial service providers in the country, including ASB, ANZ, BNZ and Westpac, are all projecting that the Official Cash Rate (OCR) will escalate to 0.5 per cent next month. Just hours ahead of the central bank’s announcement, both Kiwibank and ASB announced plans to increase their term deposit rates, although for a limited time in the case of the former.
Kiwibank, a subsidiary of the state-owned New Zealand Post Limited, said on Wednesday that its rates for term deposits will be increased by 0.4 per cent to 1.2 per cent for its 200-day term. It will only be offered for a limited time, up until 18 July, and will be applied to business, Retail and PIE Term Deposits on investments $10,000 and above. For those with an investment between $5,000 and $9,900, Kiwibank offers an increased rate of 1.10 per cent from the previous 0.70 per cent rate.
Meanwhile, the Auckland Savings Bank (ASB) is offering a 2 per cent rate for five-year term deposits, a 0.25 per cent increase from the previous rate. For six-month term deposits, ASB’s interest rates have risen from 0.80 per cent to 1 per cent.
Previously, the top banks in the Pacific island nation were of the view that the OCR, which has been held at 0.25 per cent for the last 16 months, would hike for the first time in November. However, there was a change in opinion after the Reserve Bank decided on Wednesday to call time on “quantitative easing”, which will be terminated next week, almost a year earlier than originally expected.
Explaining its decision, the central bank’s monetary policy committee said since late last year, the economic conditions have been “persistently stronger than anticipated” and the risk of deflation and high unemployment had receded. “The committee agreed that a ‘least regrets’ policy now implied that the significant level of monetary support in place since mid-2020 could be reduced sooner, so as to minimise the risk of not meeting its mandate,” it said.
