What is the Official Cash Rate set by?

The Official Cash Rate (OCR) is set by the Reserve Bank of New Zealand. This rate is a critical monetary policy tool used to influence interest rates and control inflation in the economy. The Reserve Bank adjusts the OCR to achieve its inflation target and support economic stability.

When the Reserve Bank raises the OCR, it typically leads to higher interest rates in the economy, which can slow down spending and borrowing. Conversely, lowering the OCR usually makes borrowing cheaper, encouraging spending and investment. This mechanism allows the central bank to manage economic growth and maintain price stability effectively. The other choices, while relevant in their own contexts, do not have the authority to set the OCR. Thus, the correct answer accurately identifies the institution responsible for this important economic tool.