10-year bond rate

IBISWorld forecasts the 10-year bond rate to fall by 0.13 percentage points in 2025-26 to 4.41%. The 10-year bond rate is set to fall in the current year, with the RBNZ continuing its official cash rate (OCR) cycle since August 2024. Following a period of high interest rates due to inflationary pressures, a return to inflation near its target range of 1% to 3% has led to interest rate cuts. According to the RBNZ's November 2025 Monetary Policy Statement, the annual consumer price index has risen by around 3% in the September 2025 quarter and is expected to fall to 2% by mid-2026. The weak labour market and economy, as well as substantial spare capacity in New Zealand's economy, have contributed to the RBNZ's 50 and 25 basis points rate cut decisions in October and November 2025. The 10-year bond rate is expected to fall in 2025-26.

The 10-year bond rate has exhibited high volatility, decreasing over the years up to 2021-22 before taking a sharp upswing. Movements in the 10-year bond rate have often preceded changes in the cash rate due to investor and market expectations of cash rate decisions. The RBNZ consistently cut the cash rate over the two years through 2020-21 due to weak inflation and subdued economic growth owing to the pandemic. These trends then reversed, leading to a climbing 10-year bond rate between 2021-22 and 2023-24, especially as yields on government bonds in other European countries also skyrocketed. Supply chain disruptions pushed up commodity, goods and services costs across the economy. Additionally, households developed significant cash reserves throughout pandemic lockdowns and started splurging when the country opened up. Central banks around the world have been riding the line to chase down inflation while potentially avoiding recessions. As New Zealand's inflation approaches its target rate, it has curbed bond rates that have been surging over the three years through 2023-24. The RBNZ's decision to cut rates from 5.5% in August 2024 to around 2.25% in November 2025 has also weighed on the 10-year bond rate, offsetting overall increases. Overall, IBISWorld forecasts the 10-year bond rate to rise at an average annual rate of 0.70 percentage points over the five years through 2025-26.