Official Cash Rate (OCR)
The interest rate the Reserve Bank of New Zealand sets to influence inflation and the wider economy. When the OCR drops, mortgage rates and savings interest both tend to fall; when it rises, both go up. The headline rate banks watch most closely.
The Official Cash Rate (OCR) is the interest rate the Reserve Bank of New Zealand charges retail banks to borrow money overnight. It's the lever the Reserve Bank uses to control inflation: when inflation is too high, the OCR goes up to slow spending and borrowing; when the economy is weak, it comes down to encourage activity.
The Reserve Bank reviews the OCR seven times a year. Four of those come with a full Monetary Policy Statement; the other three are shorter Monetary Policy Reviews. Each move is usually 25 or 50 basis points (0.25% or 0.50%).
For most New Zealanders, the OCR matters because retail banks price their mortgage and savings rates roughly off it. A lower OCR means cheaper mortgages but lower savings interest; a higher OCR means the opposite. The OCR is 2.75%. It came a long way down from its 5.50% peak in 2024, but that cycle is over: the Reserve Bank raised in July 2026 and again on 2 September 2026.
Why this matters
Understanding the OCR helps you time your mortgage refixes and pick the right savings account at the right moment. With the OCR heading up, fixing sooner protects you from the next rise. When it is falling instead, locking a long fixed term at the top of a cycle can leave you paying more than your neighbour for years. The OCR doesn't move your repayment overnight, but it sets the direction for everything else.
More Banking terms
Open Banking
A system that lets you securely share your bank data with third-party apps via APIs. In NZ, Akahu provides open banking connections to all major banks. You control what data is shared and can revoke access anytime.
Direct Debit
An automatic payment where a company takes money from your account on a set schedule. Used for power bills, phone plans, insurance. You authorise it once and it happens automatically.
Automatic Payment (AP)
A payment you set up yourself to go out automatically on a schedule. Unlike a direct debit (which the company controls), you control the amount and timing of an AP.
Term Deposit
Money locked in a bank account for a fixed period (3-12 months) in exchange for a higher interest rate. You can't withdraw early without a penalty. Good for savings you won't need soon.
Put this knowledge to work
Steady helps you track, save and grow, with a coach that speaks plain English.