Reserve Bank waiting till December to cut interest rate

New Zealand's central bank will wait until December to cut its benchmark interest rate rather than reducing borrowing costs in September, says UBS.

Signs that the economy expanded in the first quarter did not support a September rate cut, said Robin Clements, chief economist at UBS New Zealand in Christchurch.

New data this week will probably show the economy grew 0.5 per cent after contracting 0.1 per cent in the fourth quarter.

Reserve Bank Governor Alan Bollard said on June 8 he would not cut interest rates this year because of the outlook for accelerating inflation.