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 at Monetary Policy Statement releases. 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. As of May 2026 the OCR sits at 3.25%, down from a 5.50% peak through 2024.
Why this matters
Understanding the OCR helps you time your mortgage refixes and pick the right savings account at the right moment. If the OCR is falling, locking a 5-year fixed mortgage at the top of the rate cycle can leave you stuck paying way more than your neighbour for years. If it's rising, locking in early protects you. The OCR doesn't move your repayment overnight — but it sets the direction for everything else.
Learn more
Read our guideRelated 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 AI that speaks plain English.
Try Steady free