Rates left steady - OCR stays at 2.5pc

Official interest rates have been left unchanged at a record low 2.5 per cent by the Reserve Bank this morning.

Reserve Bank Governor Alan Bollard is expected to wait until at least April before next raising interest rates.

Today's decision to leave rates unchanged was expected by most economists, who are expecting an increase of 50 basis points (0.5 per cent) by June 30.

After today's announcement there are three OCR reviews before mid-year - March 11, Apri1 29 and June 10, and only five economists of the 20 surveyed expect Bollard will move rates in March.

In his press statement just released, Bollard said the outlook for the economy "remains consistent with the projections underlying the December Monetary Policy Statement."

"Global activity continues to recover, helping push New Zealand's export commodity prices higher. Economic growth is most apparent in China, Australia, and emerging Asia. However, sustained growth throughout our trading partners is not assured, with many still facing impaired financial sectors and overall activity still reliant on policy support," said Bollard.

"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."

"Annual CPI inflation is currently at the centre of the target band, and is expected to track comfortably within the band over the medium term," he said.

"The economy is being assisted by both monetary and fiscal policy support. As growth becomes self sustaining, fiscal consolidation would help reduce the work that monetary policy might otherwise need to do."

"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."

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See a history of the OCR here