Business Accountants: How the 2025 OCR Rate Cut Could Affect Your Small Business in New Zealand

On 6 April 2025, the Reserve Bank of New Zealand (RBNZ) announced a 25 basis point cut to the Official Cash Rate (OCR), bringing it down to 3.5%. This monetary policy shift is aimed at supporting economic stability and encouraging growth during uncertain global conditions. But what does this mean for small and medium-sized businesses across Wellington and New Zealand?

At Outside Accounting Wellington, we help business owners make sense of financial policy changes — and the latest OCR cut is one that could have a real impact on your operations, cashflow, and future plans.

What is the Official Cash Rate (OCR)?

The OCR is the interest rate set by the RBNZ to influence the overall level of interest rates in New Zealand’s economy. It impacts the rate at which commercial banks borrow from the Reserve Bank — which in turn affects the interest rates on business loans, mortgages, and other financial products.

When the OCR is reduced, borrowing generally becomes cheaper, which can stimulate both business investment and consumer spending.

How Could the OCR Cut Affect Your Small Business?

✅ Potential Benefits

• Lower borrowing costs: Reduced interest rates on loans and overdrafts can make financing business activities more affordable.

• Improved cashflow: Lower repayments can free up capital to reinvest in marketing, hiring, or technology.

• Higher consumer spending: If your business serves everyday consumers, they may be more willing to spend as interest costs on their personal debt drop.

• Encouragement to invest: With capital more accessible, this could be an ideal time to consider expansion or product development.

⚠️ Potential Drawbacks

• Inflation risk: Cheaper borrowing and increased spending can push up inflation, raising costs for materials, wages, and logistics.

• Slower recovery: In some sectors, the OCR cut may not stimulate demand fast enough to offset global economic headwinds.

• Partial bank pass-through: Not all banks pass on the full OCR reduction, so business owners should compare options for the best lending terms.

What Should Your Business Do Next?

Whether your focus is on reducing costs, planning for growth, or navigating market uncertainty, the latest OCR shift is an important factor in shaping your 2025 business strategy.

At Outside Accounting, we help Wellington business owners:

• Assess loan structures and refinancing opportunities.

• Build cashflow forecasts that reflect current interest rates.

• Create inflation-conscious pricing models.

• Stay up to date with OCR trends and Reserve Bank updates.

Talk to us today about how the OCR rate change may affect your business — and how to make smart financial moves in response.

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