Peak Pump

OCR Trend to Peak the economy

Gerald Mullaney

25 May 2025

The next review is due 28 May 2025 where it is widely expected that the OCR will be reduced by 25 basis points down to 3.25%

The view is that there maybe three more cuts this would bring the OCR to a low of 2.50%

There is quite a way to go to Nov 2025.

The trend to an OCR bottom is going to be painfully slow but there is a plan, that is to not peak the economy too soon before the election, having that is mind it can take 12 months for the OCR to stimulate the economy to a peak therefore its the view that the OCR Bottom will occur in Nov 2025 to effect a peak in the economy during 2026. Peaking into Nov 2026.

It is the view that the peak pump will be underway by Nov 2026 in rediness for the 2026 election year peaking in September, October, November 2026.

What does this mean is means that certain policies will be relaxed to stimulate the economy from nov 2025 through to nov 2026.

The takeaway, be viligant in securing a low interest rate from November 2025 through to November 2026.

Once the OCR does reach a low and that will be indicated by the RBNZ when it stops reducing the OCR the last cut just might be nov 2026.

Its going to be painfully slow going into Nov 2026 waiting for that low interest rate to appear.

The orginal low was penciled in for May 2025 however that view has been pushed out to Nov 2025.

A lot of forcasting does depend on the inflation outlook keep an eye on inflation trends as if inflation does happen to trend up this may and can push up interest rates.

Be ready and prepared for a GIFT.

OCR low forcast

When will the low arrive in 2025?

Gerald Mullaney

16 May 2025

It was the previous view that the OCR would reach a low by May 2025.

This will not be the case, the OCR low is now reviewed to 8 Oct 2025, possibly Nov 20 2025.

The reason for this revised forcast is that the RSBNZ has made the decesion to go very slow by only reducing to OCR by 00.25 basis points.

Treading very carefully so as not to cause inflation and inflation in property prices.

The reason for this is as follows

1. The RSBNZ does not want an other property boom.

2. The Govt and the RSBNZ want to contain inflation in the range of 2 to 3% with 2.50% being the hot spot.

The economy and inflation in 2020/2021 caused huge inflation on property prices and this could take 10 years to bring prices and incomes into balance.

Be on the alert as great rates may appear by Nov 2025 and beyond depending on the economy and inflation.