Luxon: Interest rates are coming down

• By Christopher Luxon, Prime Minister and MP for Botany

For many Kiwis, the past few years have been challenging.

High interest rates, inflation, and the cost of living have hit households and businesses hard.

But the latest announcement from the Reserve Bank – a 50-basis point drop in the Official Cash Rate (OCR) – is welcome news.

It’s the third reduction since last August, and it brings the OCR down to 3.75 per cent.

In simple terms, it means people will see more money in their pockets in the coming months.

For homeowners with mortgages, lower interest rates are likely to bring down repayments.

For many, this drop is not just about relief in the short term, but also a sense of stability.

A drop of almost two percentage points over six months could make a tangible difference in what families and businesses can do with their finances.

It’s also a sign of growing confidence among businesses.

A stable and more predictable economic environment encourages companies to invest, expand, and hire.

Last week, the BNZ and Business NZ reported that manufacturing growth had risen its highest level since September, 2022 – a clear sign that confidence is returning.

The latest Federated Farmers Farm Confidence Survey shows confidence has surged 68 points since July 2024 – the largest improvement since the question was first introduced in 2016 – reflecting new optimism within the sector.

Looking ahead, we want to keep driving this momentum.

There’s still work to do, but we’re committed to delivering the best outcomes for New Zealanders.

Economic growth is how we reduce the cost of living and help you and your family get ahead – and that’s what our Government is focused on doing.