RBNZ's Karen Silk suggests savers shop around if OCR hike's not passed through to deposit rates
RBNZ Assistant Governor Karen Silk is urging savers to shop around for better deposit rates as banks are slow to pass on Official Cash Rate hikes. She noted that banks are currently prioritizing liquidity and facing low lending demand, leading to a disconnect between mortgage and deposit rate adjustments.
Why it matters
This highlights a disconnect in monetary policy transmission, where consumers are not receiving the expected financial benefits of rising interest rates, potentially impacting household savings.
Reserve Bank (RBNZ) Assistant Governor Karen Silk says an Official Cash Rate increase should see deposit rates increase as well as floating mortgage rates, but they're not moving at the same pace.
"We’re definitely not seeing the same level of pass through. So you even saw it yesterday [Thursday] with the banks increasing the floating mortgage rate by 25 basis points. But then you look at what actually happened to the deposit rates, there were some increases but they were like five and 10 basis points, not 25 basis points," Silk told interest.co.nz on Friday.
Silk's comments come after the RBNZ noted in its Wednesday Monetary Policy Statement it was seeing limited pass through of higher wholesale interest rates to term deposit rates. On Wednesday the RBNZ increased the Official Cash Rate (OCR) to 2.75% from 2.50% , following on from another 25 basis points increase in July.
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