Reserve Bank Hikes Cash Rate Again, Methanex Closes Taranaki Plant

The Reserve Bank of New Zealand has raised its official cash rate (OCR) to 2.75%, marking the second increase in three months. The decision follows a 25-basis-point hike to 2.50% in July, which was the first increase in over three years.

In its statement, the Reserve Bank said all members of the Monetary Policy Committee agreed that the central projection for the OCR is appropriate. However, it noted that further rate hikes are likely, suggesting a challenging economic environment ahead.

Methanex, New Zealand's largest gas user, has announced it will close its Taranaki plant due to declining natural gas supply. The company plans to sell its New Zealand natural gas contractual entitlements and indefinitely idle its production facilities at Motonui by the end of February 2027.

The Reserve Bank's decision is expected to impact borrowers with variable-rate mortgages, as higher interest rates may lead to increased repayments. On the other hand, savers may benefit from higher returns on their deposits.