spinofflive
Reserve Bank Goverrnor Adrian Orr
Reserve Bank Goverrnor Adrian Orr

The BulletinFebruary 20, 2025

Reserve Bank says healthy OCR cut signals better days ahead

Reserve Bank Goverrnor Adrian Orr
Reserve Bank Goverrnor Adrian Orr

The bank has forecast more cuts in 2025, saying retail inflation is fully under control, writes Catherine McGregor in today’s extract from The Bulletin.

To receive The Bulletin in full each weekday, sign up here.

A substantial cut, with more to come

Chalk it up as a win for the economists. A 50 basis point cut to the official cash rate was what the vast majority of them predicted, and that’s exactly what the Reserve Bank announced on Tuesday. Its monetary policy statement said a drop from 4.25% to 3.75% was warranted, given that economic conditions were consistent with the consumer price inflation target being sustainably achieved. Inflation is currently at 2.2%, roughly in the middle of the RBNZ’s target band of 1%-3%.

While mortgage holders celebrate the cut’s effect on interest rates – though the trickle-through has so far largely been restricted to variable rate loans – the economists are already looking ahead. The RBNZ made it clear that it expects to keep cutting, advising that “if economic conditions continue to evolve as projected, the committee has scope to lower the OCR further through 2025″. The bank’s forecast track for the rate implies another 0.25% cut in April and then again in May, says Kiwibank’s Jarrod Kerr, on its way to a projected 3.14% by year’s end. “In November, the RBNZ forecast that it would reach that point in March 2027 and be at 3.6% in December this year,” notes Businessdesk (paywalled).

Median house prices down

For property market spruikers – and first home buyers ready to enter the market – the interest rate cut will come as welcome news. House sales were up significantly in January, but prices are still in decline, according to the latest REINZ figures. The national median selling price is sitting at $750,000, a 1.4% decrease compared to January last year.

Auckland’s median price of $949,000 is a 1.7% decrease from January 2024, while Wellington’s new median house price is $750,000, 1.3% less than it was a year ago. The Post reports that average prices dropped for every part of the Wellington region “except Porirua, which has gone up from $745,000 to $850,000, an increase of 14.1%. Wellington City has dropped $5000 in the last year to $840,000 while Upper Hutt dropped by a huge $55,000 in price.”

Government trumpets growing economy

Following the OCR announcement, the government was keen to focus on the Reserve Bank’s positive outlook for 2025. “This is good news for New Zealanders. A growing economy means more money in people’s pockets, more jobs and more opportunities,” said finance minister Nicola Willis.

The opposition was more interested in highlighting the conditions that made big interest rate cuts necessary in the first place. “The Bank’s rate cut is a direct response to the economic downturn that Luxon’s government’s decisions have caused,” said Labour’s finance spokesperson Barbara Edmonds. The Greens’ co-leader Chlöe Swarbrick said that while she welcomed the cut, it was “critical to understand the unnecessary collateral damage created by the Government’s chosen path of destruction”.

Farmers have a spring in their step

One group that increasingly shares the RBNZ’s sunny outlook is farmers, who are feeling more confident than they have in over a decade. That’s according to the latest Federated Farmers survey, “which shows falling interest rates, rising incomes and more favourable farming rules have all played a major role in the improvement”, the Herald reports. Federated Farmers president Wayne Langford says that while the turnaround is impressive, confidence is still only barely in positive territory. “It’s been a remarkable recovery in farmer confidence over a short period of time, but I’m very conscious that we were coming off an extremely low base.”

Keep going!
Image: Archi Banal
Image: Archi Banal

The BulletinFebruary 19, 2025

Manurewa Marae inquiry claims its first scalp

Image: Archi Banal
Image: Archi Banal

Stats NZ’s head is stepping down over the agency’s failure to safeguard census data, and more officials may soon be in the firing line, writes Catherine McGregor in today’s extract from The Bulletin.

To receive The Bulletin in full each weekday, sign up here.

An ‘absolutely unacceptable’ failure

Stats NZ chief executive and government statistician Mark Sowden has apologised and stepped down over data protection failures related to the 2023 census. On Tuesday a Public Service Commission report on the safeguarding of data at Manurewa Marae was released alongside one commissioned by Stats NZ itself. The PSC inquiry found that a number of agencies – chief among them Stats NZ, the Ministry of Health and Health NZ – had failed to adequately protect New Zealanders’ personal information. Lyric Waiwiri-Smith dives deeper into the two reports’ key findings over on The Spinoff this morning.

Along with a number of other agencies, Stats NZ has been told to pause all new contracts or renewals with the service providers at the centre of the controversy. It has also launched its own 33-point remediation plan in response. In a statement published on the Stats NZ website, Sowden said it was “unacceptable for people’s personal information to be misused in the way that’s been alleged, and absolutely unacceptable that we did not ensure that it could not happen”. He added: “To the people of Aotearoa New Zealand, I unreservedly apologise.”

How we got here

The data safeguarding inquiries were launched last year following allegations of improper use of personal census and Covid vaccination data collected or received by Manurewa Marae, Te Whānau o Waipareira (Waipareira) and Te Pou Matakana, formerly known as the Whānau Ora Commissioning Agency (Woca).

The relationships between the three service providers are complicated, to put it mildly. They include “John Tamihere being the chief executive of Waipareira and the Woca (he’s also the president of Te Pāti Māori), Waipareira being a shareholder in the Woca, and the Manurewa Marae being contracted by the Woca to lift Māori and Pasifika rates of Census completion”, explains the Herald’s Jamie Ensor.

In Stats NZ’s case, it contracted the Woca to “assist with a ‘last-ditch’ attempt to collect census data from people Stats NZ had been unable to reach,” RNZ reports. A group of former workers at the marae alleged that data on census forms was photocopied and used to support Te Pāti Māori’s campaign in the Tāmaki Makaurau electorate. TPM’s candidate, Takutai Tarsh Kemp, the chief executive of Manurewa Marae at the time, won the seat by just 42 votes over Labour’s Peeni Henare. TPM denies any wrongdoing.

More inquiries underway

The data safeguarding inquiry is just one strand of a wide-ranging investigation into the allegations. A police team is investigating the allegations of census data misuse, following a request by Te Pāti Māori that “the New Zealand Police launch a thorough and efficient investigation in order to prove our innocence and clear the good names of those accused”. Both the Woca and Waipareira deny that census data was used for electoral purposes.

Meanwhile the Public Service Commission has referred some matters uncovered by its inquiry to other agencies for further investigation, Stuff reports. Separately, the Electoral Commission has acknowledged it made a mistake in opening a polling booth at the marae, given that the marae’s chief executive was standing for election. On Tuesday, Labour leader Chris Hipkins said that while he wouldn’t go as far as NZ First’s Winston Peters, who claimed Peeni Henare had his seat “stolen”, he did believe “the result in that seat was unfair”.