No change to cash rate

The Official Cash Rate (OCR) will remain unchanged at 7.25 per cent.

"The economy has continued to slow in recent months, broadly in line with the outlook contained in our December Monetary Policy Statement", Reserve Bank Governor Alan Bollard said today.

Most commentators had picked the retention of interest rates at their current levels.

GDP growth slowed in the third quarter of 2005, Bollard added, due to the impact of the high exchange rate on the export and import-competing sectors, and a fall in construction.

"Looking to 2006, while there are some early indications, we are yet to see hard evidence of a sustained slowdown in domestic demand", Bollard said in a statement.

"To date, strong domestic demand has been fuelled by strong employment, wage growth, rising house prices, and growth in Government spending.

"Overall, total spending continues to outstrip growth in production, contributing to an unsustainably large current account deficit", he said.

* More to follow soon