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transactions are made every day. The bank pays interest on settlement account balances, and charges interest on overnight borrowing, at rates related to the OCR. These rates are reviewed from time to time, as is the OCR. The most crucial part of the system is the fact that the
Reserve Bank sets no limit on the amount of cash it will borrow or lend at rates related to the OCR.
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As a result, market interest rates are generally held around the
Reserve Bank's OCR level. The practical result, over time, is that when market interest rates increase, people are inclined to spend less on goods and services. This is because their savings get a higher rate of interest and there is an
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interest rate will change to reflect its availability. This system indirectly influences the term structure of interest rates in the whole economy. Changes to the official cash rate generally affect the rates on housing and other loans within a matter of days or weeks. Under the
Australian system the
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The OCR influences the price of borrowing money in New
Zealand and provides the Reserve Bank with a means of influencing the level of economic activity and inflation. An OCR is a fairly conventional tool by international standards. In the past, the Reserve Bank used a variety of tools to influence
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The OCR was introduced in March 1999 and was reviewed eight times a year up to 2015 by the
Reserve Bank of New Zealand. Since 2016, the OCR is reviewed seven times a year. Monetary Policy Statements are issued with the OCR on four of those occasions. Unscheduled adjustments to the OCR may occur at
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As banks settle all inter-bank transfers overnight, the central bank can regulate the rate paid for cash by the sale or buy back of bonds and other government issued securities (these are known as domestic market operations). As the sale or purchase of bonds affects the supply of money, then the
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When people save more or spend less, there is less pressure on prices to rise, and therefore inflation pressures tend to reduce. Although the OCR influences New
Zealand's market interest rates, it is not the only factor doing so. Market interest rates – particularly for longer terms – are also
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Most registered banks hold settlement accounts at the
Reserve Bank, which are used to settle obligations with each other at the end of the day. For example, if a customer makes out a cheque or makes an EFTPOS payment, the money is paid by their bank to the recipient's bank. Millions of such
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to meet the inflation target specified in the Policy
Targets Agreement. The current agreement, signed in December 2008, defines price stability as annual increases in the Consumers Price Index (CPI) of between 1 and 3% on average over the medium term.
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affected by the interest rates prevailing offshore since New
Zealand financial institutions are net borrowers in overseas financial markets. Movements in overseas rates can lead to changes in interest rates even if the OCR has not changed.
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to adjust the interest rates that apply in each country's economy. The OCR cannot be changed by transactions between financial institutions as this does not change the supply of money, only its location. Only transfers between the
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inflation, including influencing the supply of money and signalling desired monetary conditions to the financial markets. Such mechanisms were more indirect, more difficult to understand, and less conventional.
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The rate is set by the central banks regularly, usually every month in
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issues its dealing intentions at the start of each day, and banks and other financial institutions will act prior to the actual rate being achieved.
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A decreased cash rate could mean lower home loan rates for borrowers, but can also mean lower savings and term deposit rates for savers.
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incentive to save; and conversely, people with mortgages and other loans may experience higher interest payments.
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which the central bank charges on overnight loans between commercial banks. This allows the
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271:"Official Cash Rate (OCR) decisions and current rate - Reserve Bank of New Zealand"
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Reserve Bank of New Zealand official cash rate decisions and current rate
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Australian and New Zealand Standard Industrial Classification
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In New Zealand, the overnight cash rate (OCR) is set by the
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Bank of England Monetary Policy Committee bank rate history
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How interest rate cut affect Australian stock market
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252:– in the United Kingdom set by the Bank of England
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1411:Campaign Against Foreign Control of Aotearoa
1390:Trans-Pacific Strategic Economic Partnership
315:"RBA changes tune on cash rate expectations"
365:Federal Reserve intended federal funds rate
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1052:New Zealand property bubble, 1987–present
117:Learn how and when to remove this message
347:Key European Central Bank interest rates
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166:and an institution can affect the OCR.
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55:adding citations to reliable sources
1421:New Zealand Council of Trade Unions
1047:Finance company collapses, 2006–12
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293:"What is the official cash rate?"
202:and on March 16, 2020 during the
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42:needs additional citations for
670:Australian Securities Exchange
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295:. Reserve Bank of New Zealand
273:. Reserve Bank of New Zealand
909:Australia–United Kingdom FTA
513:Australian Capital Territory
1467:Operations of central banks
1175:Reserve Bank of New Zealand
1037:Mother of all Budgets, 1991
884:Australia–United States FTA
774:National Electricity Market
191:Reserve Bank of New Zealand
159:Reserve Bank of New Zealand
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1187:Overseas Investment Office
629:Minerals Resource Rent Tax
1368:Closer Economic Relations
1042:Leaky homes crisis, 2000s
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879:Australia–New Zealand FTA
825:Social class in Australia
634:Passenger Movement Charge
172:Reserve Bank of Australia
155:Reserve Bank of Australia
759:Energy efficiency rating
614:Goods & Services Tax
1223:New Zealand Dairy Board
904:Indonesia–Australia FTA
1462:Finance in New Zealand
1452:Economy of New Zealand
1352:International rankings
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1218:New Zealand Meat Board
983:Economy of New Zealand
451:Snowy Mountains Scheme
426:Banking crisis of 1893
137:) is the term used in
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1373:Free trade agreements
341:About Monetary Policy
1447:Economy of Australia
1404:Unions and lobbyists
1158:New Zealand Treasury
1027:Rogernomics, 1984–90
815:Poverty in Australia
407:Economy of Australia
200:September 11 attacks
66:"Official cash rate"
51:improve this article
1330:Economic conditions
1192:Commerce Commission
1032:Ruthanasia, 1990–93
894:Japan–Australia FTA
889:China–Australia FTA
874:Australia–Korea FTA
869:Australia–Chile FTA
830:Wealth in Australia
810:Income in Australia
793:Economic conditions
689:Regulatory agencies
648:Banking and Finance
436:Four pillars policy
131:overnight cash rate
1311:Telecommunications
1180:Official cash rate
1163:New Zealand budget
1068:New Zealand dollar
1022:Think Big, 1979–84
1017:Black Budget, 1958
1007:IC&A Act, 1894
716:Corporations power
665:Official cash rate
569:Telecommunications
250:Official bank rate
245:Federal funds rate
18:Official Cash Rate
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467:Australian dollar
222:How the OCR works
210:What the OCR does
204:COVID-19 pandemic
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660:Financial system
441:Great Depression
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40:This article
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1337:Social class
1267:Woodchipping
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726:Reserve Bank
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319:. Retrieved
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164:central bank
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49:Please help
44:verification
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1301:Oil and gas
1279:Hospitality
1250:Aquaculture
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508:Tasmania
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345:Europe:
239:See also
157:and the
145:for the
1347:Poverty
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1255:Whaling
1245:Fishing
990:History
940:Commons
744:Biofuel
655:Banking
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574:Tourism
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414:History
277:26 June
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1342:Income
1296:Mining
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554:Mining
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72:
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1383:China
1098:$ 100
584:Ports
98:JSTOR
84:books
1321:Wine
1235:Beer
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846:ACTU
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701:APRA
696:ACCC
591:Wine
323:2019
301:2020
279:2019
141:and
129:The
70:news
1130:$ 2
1125:$ 1
1120:50c
1115:20c
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1078:$ 5
721:FWC
135:OCR
53:by
1443::
206:.
181:.
975:e
968:t
961:v
681:)
672:(
620:)
616:(
399:e
392:t
385:v
325:.
303:.
281:.
133:(
120:)
114:(
109:)
105:(
95:·
88:·
81:·
74:·
47:.
20:)
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