The Reserve Bank of New Zealand recently reduced the official cash rate (OCR) to 3.75%. What does a drop in interest rates mean for you, your business and your financial opportunities?
Let’s take a look at how a drop in interest rates may affect your finances.
Reduced cost of borrowing
Lower interest rates on loans. This directly translates to lower interest payments on your existing loans and potentially more favourable interest rates on any new loans you take out.
Increased access to credit: With lower borrowing costs, you may find it easier to secure financing for expansion, investment in new equipment, or to overcome and present challenges.
Improved cashflow
Reduced debt service: Having lower interest payments frees up cashflow. This can be used to reinvest in the business, used for marketing, or distributed to shareholders.
Increased consumer spending: Lower interest rates help to stimulate consumer spending. This can mean increased demand for goods and services, higher sales and boosted revenues.
Better opportunities for investment
Lower cost of capital: With cheaper borrowing costs, you can invest in growth, including research and development, technology upgrades or hiring new staff.
Increased confidence: Lower interest rates can boost investor confidence. This makes it easier for you to find investors and raise capital through equity financing.
Economic growth
Stimulate the economy: Lower interest rates can boost economic growth by encouraging borrowing, investment and consumer spending. This creates a more favorable environment for your business to thrive in. A stronger economy = a more stable future
Planning for the future of your business is essential. With interest rates currently lower, this may be a good opportunity to consider borrowing and putting your 2025 strategy into action.
Talk to us about your growth plans and how the interest rate changes may impact your business.
We’re here to help you reinvest, grow and keep on evolving.
About Pathfinder Solutions
Pathfinder Solutions advisory team members have either owned or managed businesses, or are investors themselves, so we know first-hand the challenges you face in your world.
Sure we’re Accountants, but the best solutions in business come from focusing on more than just the numbers. Our real-world business experience delivers just that.
