Hon Nicola Willis
Minister of Finance

The latest inflation figures confirm inflation is back under control, Finance Minister Nicola Willis says.

Stats NZ reported today that inflation increased slightly to 2.5 per cent in the year to March but remained within the Reserve Bank’s target range of 1 to 3 per cent.

“This is the third consecutive quarter that inflation has remained within the bank’s target range and confirms the era of high inflation is over,” Nicola Willis says.

“The steps the Government has taken to stop wasteful public expenditure have taken the heat out of inflation and given the Reserve Bank room to reduce interest rates.

“Decisions about the Official Cash Rate are a matter for the Reserve Bank which is operationally independent, but the stabilisation of inflation is good news for people with mortgages.

“It means people should be able to look forward to more rate reductions in the coming months.

“Encouragingly, banks are continuing to drop their mortgage rates with some now offering fixed rates of less than 5 per cent.

“Also encouraging is that non-tradeable inflation – which paints a picture of domestic demand and supply conditions – is continuing to fall, down from 4.5 per cent in the year to December to 4 per cent in the year to March.

“The impact of lower rates on individual households depends on the terms of people’s mortgages but the Official Cash Rate has already fallen two percentage points since August.

“For someone with a $500,000 mortgage over 25 years, a two percentage point drop in their interest rate reduces their repayments by about $300 a fortnight.

“Further falls will mean more money in people’s pockets and more money flowing through business tills.”

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