-
Watch Video
-
Related
The Reserve Bank has kept the official cash rate on hold at 2.5% and has made no change to its forecast about when it will start raising rates.
In his first monetary policy statement of the year, Reserve Bank governor Alan Bollard said the economy had been tracking in line with its December forecasts, though caution remained despite signs of improvement both locally and globally.
"Sustained growth throughout our trading partners is not assured, with many still facing impaired financial sectors and overall activity still reliant on policy support," he said.
"Similarly, the New Zealand economy continues to recover. Policy stimulus and improving export earnings have seen a pickup in household spending. That said, households remain cautious, with credit growth subdued. Business spending remains weak."
The bank's decision to keep interest rates on hold had been widely expected. The market had instead been waiting for any change in Bollard's wording around the timing of when the bank may lift rates.
However, this too was largely unchanged from the December statement.
"If the economy continues to recover in line with our December projections, we would expect to begin removing policy stimulus around the middle of 2010."
Bollard also said annual inflation of 2% would likely stay within the bank's 1-3% target range over the medium term.
The official cash rate has been at 2.5% since April last year.
The kiwi dollar was virtually unchanged after the announcement
and the wholesale interest rate market also showed little
movement.
