New Zealand Banks Raise Rates After OCR Increase

The Reserve Bank of New Zealand increased the official cash rate by 25 basis points on Wednesday, prompting immediate interest rate hikes from the country's major commercial lenders. BNZ, ASB, Kiwibank, Westpac, and ANZ all raised their rates in response to the move.

Kiwibank increased its variable home loan and offset variable rates to 6.25 percent, while also raising various saver rates by 15 basis points. BNZ and ASB announced they would pass the full 25 basis point increase to their variable housing rates, with BNZ's changes taking effect on 17 September. Westpac and ANZ also implemented rate increases on Wednesday afternoon.

Despite these lending hikes, the Reserve Bank of New Zealand criticized commercial banks for a more limited pass through of higher wholesale interest rates to term deposit rates. The central bank argued that this imbalance makes funding cheaper for banks and hinders the intended transmission of monetary policy.