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Damn the Media!

The Official Cash Rate (OCR) has been increased by the Reserve Bank by 0.25% pa from a record low (the lowest it’s ever been).

But the sky is not falling like some chicken little’s in the media would have you believe.

Reason 1: Back in 2011, the OCR was reduced by 0.50% pa to provide economic stimulus after the earthquakes in Christchurch. The Reserve Bank has recently noted they want to remove that stimulus, so we’ve done alright really.

Reason 2: The OCR only affects the floating home loan interest rate and the short term fixed rates (think 6 and 12 months). The longer fixed rates are funded in an entirely different way so won’t be impacted by the news today.


 

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