Kiwibank first to lift term deposit rates after RBNZ holds OCR

Kiwibank raised its nine-month term deposit rate by 15 basis points to 3.55 percent and its one-year rate by five basis points to 3.9 percent on 28 May 2026, becoming the first major bank to adjust offerings after the Reserve Bank held the official cash rate steady at 2.25 percent.

Kiwibank acted on 28 May, the day after the Reserve Bank of New Zealand's Monetary Policy Committee voted 3-3 to keep the OCR unchanged, with the Governor casting the deciding vote.

The move lifts Kiwibank's 9-month rate to 3.55 percent and the 1-year rate to 3.9 percent. These changes came amid the committee's signal that OCR increases will likely be needed later in 2026.

RBNZ projections show annual CPI inflation peaking at 4.3 percent in the September 2026 quarter due to Middle East conflict effects before returning to the 2 percent target midpoint by mid-2027.

The narrow vote surprised markets. Infometrics chief forecaster Gareth Kiernan noted that the unexpectedly close decision lifted implied future rate paths by 5–10 basis points in swap pricing.

Term deposit rate comparison

Kiwibank's adjustment positions it competitively against peers. According to Moneyhub comparisons, pre-move advertised 9-month rates included BNZ at 3.50 percent, Westpac at 3.60 percent and ASB at 3.55 percent.

RBNZ B26 series data showed the average new 9-month term deposit rate at 3.58 percent and the 1-year rate at 3.74 percent in the most recent period before the decision.

Infometrics chief forecaster Gareth Kiernan noted limited headroom before banks must pass on higher funding costs.

However, yesterday's unexpectedly close decision has seen swaps pricing for future meetings lifted by 5-10 basis points... swap rates had come down 15-20 basis points over the last fortnight, so there could be a little bit of scope for further wholesale rate rises before banks need to pass those increases on.

No other major banks announced immediate term deposit changes in the first 48 hours.

Mortgage rates and the July OCR watch

According to RBNZ data, two-year fixed mortgage rates have already risen from a 2025 low of 4.5 percent to around 5.2 percent.

Infometrics' Kiernan said it would be "very surprising" if the OCR does not increase at the 8 July 2026 review, given how close the RBNZ came to raising the cash rate at its May meeting. Based on standard mortgage modelling, a 25 basis point increase would add roughly $30 to $50 per fortnight to repayments on a typical $500,000 mortgage.

Kiwibank's early move tests market appetite for higher deposit rates and may pressure larger peers to follow, raising sector funding costs that flow through to borrowers.