12 Mar 2009

Three banks respond to cut in Official Cash Rate

9:55 pm on 12 March 2009

Three banks have responded so far to the latest drop in the Official Cash Rate.

The Reserve Bank Governor Allan Bollard has lowered the OCR by half a percentage point to a record low of 3%.

The Bank of New Zealand passed on the full amount to businesses and farmers, Westpac focussed on households and ANZ National bank reduced rates for all three groups.

A BNZ spokesperson, Craig Haycock, says the bank had already priced in the cut to mortgage holders.

He says the BNZ preempted the OCR fall in terms of householders because the bank had the lowest rate in the market through early March.

Mr Haycock says the bank is now reviewing what it will do with mortgage rates in the near future.

Westpac is focusing on householders and says it will cut its floating mortgage by 0.4% next week.

It has also reduced credit card rates but says at this point there are no plans to reduce borrowing costs for businesses.

ANZ National says it will pass on the cut to householders and commercial customers.

Wellington Chamber of Commerce

The Wellington Regional Chamber of Commerce's chief executive Charles Finney says he agrees with the Reserve Bank governor that the Official Cash Rate should not go below 2%, even if the recession gets worse.

Mr Finney says the rate needs to remain above a certain level so that New Zealand can continue to borrow internationally as well as encouraging people to invest here.

He says it's now up to the banks to play their part and pass on the rate cut.