Mark Wilkshire: Co-operative Bank CEO on OCR cut

A bold move from the Reserve Bank as it has decided to cut the Official Cash Rate (OCR) by 50-basis points, from 5.25% to 4.75%.

It's the second cut in a row, after the OCR was lowered in August - which was the first drop since May 2023. 

All of the larger banks predicted the rise, but a 25-point drop was thought to be just as likely. 

Co-operative Bank Chief Executive Mark Wilshire joins Jack Tame to discuss how this will impact homeowners. 

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Episode Transcript

Speaker 1 (00:00):
Well they have done it. The Reserve Bank has decided
to cut the OCR by fifty basis points from five
point twenty five to four point seventy five, the second
consecutive cut after the OCR was lowered in August for
the first time in four years. All the big banks
ASB and z Kiwi Bank predicted the fifty point drop,
although twenty five basis point drop was still on the

(00:22):
cards in the eyes of some economists. The Cooperative Bank
CEO Mark Wilsher is with us this evening calder Marker
Jack to be on, Yeah, what's this going to mean
for New Zealanders.

Speaker 2 (00:33):
I think it's good news for home borrowers. That's a
big drop, and you know we've often seen those big
fifty point changes up like an earthquake or global financial crisis,
so it's quite a big move and it does mean
benefits for customers over the course of the year. That
does equate to thousands and people's back pocket again from
those lower rates, and I see all of the banks

(00:55):
today have moved their floating rates following on for that
Reserve Bank announcement today.

Speaker 1 (00:59):
There is always a bit of a lag right twelve
to eighteen months before we get the full weight of
moves in the ocr felt throughout the economy. But what
does a fifty basis point cut today say about the
state of our economy.

Speaker 2 (01:11):
Yeah, obviously that was done on the back of some
you know, some pretty you know, subdued environment out there
in the economy, low spending, et cetera. That's certainly a
sign of we have been in two years of recession.
But for customers, I guess, and for general public out
there who are borrowers at those a lot of those
rates are getting passed through quite quickly. Now. Typically you're

(01:34):
quite right, there's a slow lag, but actually people have
been going short for a little while now on the
expectation rates are coming down and we've already seen markets
pricing this in. So those FIXT rates have been coming
down fast. Start of the year, they were one percent higher,
so they've already started to come down quite quickly and
people are getting the benefit of that now.

Speaker 1 (01:54):
So just how competitive are those rates at the moment.

Speaker 2 (01:57):
Well, there's quite a flurry of changes out there in
the market place, so it's got a good healthy market
to begin and to be shopping around and looking at options.
And you know, for example, we're going to one year
rate six point one nine. I mean, that's that's pretty
good rates from where it has been the start of
the year of those rates when the sevens. So yeah,
it can say there's a competition out there now and

(02:18):
in that climbing rate environment, that's good news for the
general public who've got options.

Speaker 1 (02:23):
Does this mean that we can expect another fifty basis
point cut come November when or Reserve Bank considers things
for the final time this year?

Speaker 2 (02:31):
You know, that's what markets are expecting. So the November
twenty seven official cash rate, the interest rate marks are
pricing in another fifty point cup on top of the
fifty we've just seen and the twenty five in August.
So that's a total of one point twenty five percent
in total. If all of that happens, obviously remains to

(02:51):
be seen, and that's in the hands of the Reserve Bank
for November. But it'll be interesting to see what happens
in that pre Christmas announcement.

Speaker 1 (02:59):
Yeah, I think your time mark appreciate it. That is
the Cooperative Bank CEO.

Speaker 2 (03:03):
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