How will the OCR rise affect you?

Thursday, 24 November 2022

Reserve Bank Governor Adrian Orr discusses lifting the OCR by 75 basis points to 4.25%.

WRITE ON STUFF: The Reserve Bank raised the official cash rate by 75 basis points to 4.25% on Wednesday. It has forecast the rate will peak at 5.5% next year, while also predicting a further rise in inflation and a year-long recession from mid-2023.

The move will likely influence the price of borrowing money, and may drive up interest rates.

Changes to the OCR influence all parts of the economy. It affects people's spending habits and behaviours and whether they are more likely to spend or save.

The higher cost of money reduces your purchasing power – what you can afford to buy. By raising the OCR the Reserve Bank is effectively making you buy less, which it hopes will bring down inflation.

* Reserve Bank telling Government to slow spending to bring inflation under control, economist says

* Reserve Bank statement shows 'things are worse than we thought'

* Adrian Orr lines up Labour's nightmare election inflation scenario in Monetary Policy Statement**

The OCR rise will influence all areas of the economy. How will it affect you?

The OCR rise could have a negative impact on those with home loans.

Rising interest rates could add $12,000 a year to the cost of a $500,000 home loan.

Raising the OCR is one of the Reserve Bank's tools to control the economy. Inflation is high at 7.2% now, which means you would need to spend $107.20 to get what would've cost you $100 a year ago.

We want Stuff readers to share how the rising OCR may affect them.

Will the OCR rise mean you will have to tighten your belt financially? Is there anything you will have to forgo to survive? E.g. holidays, expensive items and hobbies, or eating out.

Are you under financial pressure as it is, and how will the rise add to this?

Do you have a home loan, how much is it currently, and how much do you fear it could increase now?

Is the rising OCR likely impact the way you vote in next year's election? If so, how and why?

We're looking for submissions of about 200 words (with a photo of you attached) to be published in Stuff Nation. To share how the OCR rise will affect you, hit the contribute button, or email: stuffnation@stuff.co.nz.