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  • Writer's pictureReal Estate Today - New Zealand

Interest Rates on Hold But Cuts Now Possible in 2024

It's been a tough couple of years for mortgage holders but it is now looking increasingly likely that rates will be cut this year. Inflation is now returning to the 3 per cent level that the Reserve Bank of New Zealand aims for.


At 4.7 per cent, inflation is still too high, hence the hold this month. But a combination of declining inflation and weak economic growth is likely to change the direction of interest rates. 


The potential for a rate cut is now being mirrored around the world. A distinct change came over market expectations of interest rate movements at the end of last year. Up until November, the potential for rate increases were still considerable.


In December, US inflation came in far lower than expected and the US Central Bank outlined the potential for three rate cuts in 2024. From this point, data on inflation globally showed a similar trend.


We may be still a little way from a rate cut but the possibility of more rate rises now seems almost non existent. 


While there was no respite from rates this month, there is potential at the next rate meeting on the 22nd May. By this time, March quarter inflation data will have been released, as well as March quarter economic growth data.


A combination of inflation below three percent and the NZ economy back in recession will likely provide enough impetus for a cut. 

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