Aussie Rate Hike Widens Gap in Interest Rates Between Australia and New Zealand

The Reserve Bank of Australia (RBA) is set to lift its cash rate by 25 basis points to 4.60%, a move that will widen the gap between Australian and New Zealand benchmark interest rates.

Currently, the RBA's cash rate is 185 basis points above the Reserve Bank of New Zealand's Official Cash Rate (OCR), which stands at 2.75%. This significant difference has its roots in differing monetary policies and economic performances between the two countries.

Kiwibank Chief Economist Jarrod Kerr attributes this disparity to the RBA's more cautious approach to inflation, allowing it to generate slightly higher inflation than New Zealand but maintain a growing economy.

The NZ dollar is weakening against the Aussie dollar, making New Zealand an attractive destination for tourists. The record number of Australian visitors in July 2026, with 53% of all overseas visitors that month, is seen as a result of this currency difference.