Business and housing confidence with OCR at 2.5%
Since the start of this year, we’ve said that 2025 will be all about easing while everything settles down, setting us up for a recovery starting late 2025, through 26 and into 27.
Insights with Infinance by Brian Coogan
With 3.0% OCR considered ‘neutral’ rate of neither restrictive nor stimulative, we were always going to get to 2.5% by the end of the year and with one more announcement to go in November we’re expecting another 0.25% cut to rest at 2.25% taking us right into stimulative territory through to the next announcement in Feb, just what the doctor ordered.
The key driver in any recovery is business growth and GDP which creates employment and housing follows, with less spent on the cost of money for housing and business, this enables more discretionary spending on personal and business items, along with investment, creating the economic stimulus needed to grow the economy.
A few key notes from our Minister of Finance citing five reasons to feel positive about the NZ economy:
The echoes of many bank economists and forecasters stating the OCR falling into stimulative territory is a gamechanger.
Job ad numbers have increased through July and August for the first time in more than three years.
Commodity prices are strong particularly in dairy, meat and horticulture with signs of spending and investing coming through into 2026, and wool is on its way back.
Spending is up a bit with core retail electronic card sales up 1.7% over the past three months with month-on-month increases.
Every cycle eventually turns. While it’s been bad with some businesses closing, others are succeeding, and the overall number of businesses is higher than it’s ever been. Broader economic conditions are in place for a recovery with no underlying global crisis to interfere with New Zealand’s return to economic health.
Along with a new local Mayor and councillors, we’re in for a change of gear in the new year.
For more on the above go to www.infinance.co.nz/insights
Written by Brian Coogan, Licensed Financial Adviser and Director at Infinance – Taupo
When everything seems to be going against you, remember that the airplane takes off against the wind, not with it – Henry Ford