New Zealand interest rate unchanged

Wellington, April 26 (IANS) New Zealand's central bank Thursday announced it is to leave its interest rate unchanged at 2.5 percent.

The Reserve Bank of New Zealand (RBNZ) hinted that the 2.5-percent Official Cash Rate (OCR) could remain in place for some time as inflation remained low and the New Zealand dollar stayed strong, reported Xinhua.

RBNZ Governor Alan Bollard said inflation was restrained and was expected to stay near the middle of the bank's target range of 1 percent to 3 percent over the medium term.

The housing market, a major driver of the New Zealand economy, was expected to pick up as the rebuilding of the earthquake-battered Canterbury region accelerated, but the global economy was still uncertain, said Bollard.

"The domestic economy is showing signs of recovery. Housing market activity continues to increase and a recovery in building activity appears to be underway, as forecast. That recovery will strengthen as repairs and reconstruction in Canterbury pick up later in the year," he said in a statement.

"However, the global outlook remains of concern. Near-term indicators have moderated and financial market sentiment is still fragile," he said.

"The New Zealand dollar has stayed elevated despite recent falls in commodity prices. Should the exchange rate remain strong without anything else changing, the bank would need to reassess the outlook for monetary policy settings."

Analysts have been forecasting that the OCR will remain unchanged at least until December as New Zealand continues its slow economic recovery.

The RBNZ will announce its next OCR review June 14.