- Gerald Mullaney
- Jul 11
- 3 min read
Get inflation down and under control
Then comes lower OCR and interest rates
Gerald Mullaney
11 July 2025
This week 9 July 2025 the RSBANK NZ held the cash rate at 3.25%
one may inquire as to why this decision was made here is thinkr view as follows.
The Board is focused on inflation which has spiked up a little from the 2.20% as at Dec 2024 and now as at July 2025 at 2.50%.
The band of inflation is 2.00 to 3.00% so we can see the concern of the board in that the current rate of 2.50% is at the higher end of the set range and starting to concern them.
The RSBANK is wanting to stop the inflation rate escalating hence the pause to wait and see if inflation is a rising trend.
By Aug 2025 the next OCR review, the bank will be able to see if an upwards trend is in place and will want to curb any rise or escalation as the current rate of 2.50% is too close to the higher end of the band and escalating out of control meaning going over 3.00%.
Therefore in summary of the above points is that the concern to the bank is inflation. Get inflation right and interest rates come right then the economy gets stimulated.
In the meantime the economy feels like its in a recession sales down and expenses are up meaning profits are down. One could call the very early stage of stagflation sales trending down, expenses going up and profits going down in may cases business are losing money as one can see with many company liquidations.
Not a very good stage to be in.
Therefore the RBANK NZ is concerned.
Therefore the bank will be focusing on reducing inflation so they can continue on reducing the OCR which will reduce interest rates thus stimulating the economy.
thinkr.co.nz view is that the OCR continues to be reduced to a low of 2.50% therefore it appears it will be a long and slow grind down of interest rates as the RSBank NZ will not allow an escalation of inflation to get out of control.
We are in a rock and a hard place right now as at july 2025.
The inflation issue has to be closely monitored as letting it get out of control effect the economy later down the track.
Having nearly got Inflation under control we can look forward to the RBank NZ continuing to reduce the OCR in thinkr view down to 2.50%
That mean another three cuts Aug Oct Nov 2025
3.25 minus 00.75 points = 2.50%
This view is not guaranteed as inflation is the problem.
There is always a possibility inflation goes over 3.00% and that may mean the RSBANK NZ has to increase the OCR.
Watch out for inflation numbers coming as rise in inflation is a bad sign for interest rates. Inflation trending down is a good sign for interest rates.
thinkr view is the bottom may occur Nov 2025 the final cut for 2025.
This will lead the way for BOOM AHOY 2026 mild as it may be.
The boom Ahoy may mean higher spending, higher sales and higher profits but not any huge escalation in asset values such as property.
thinkr view is property prices trend down and then flatten out for up to 10 years therefore no huge recover in property prices if at all until the new cycle begins in 2031.
There are two priorities
Get inflation down 1.50 to 2.00% or lower the better.
Get the economy moving again by late 2025 but certainly into 2026.
thinkr is thinking that some great rates will be available from Nov 2025 to Nov 2026.