The board found there has been a "reasonable level of engagement" by Hussein as an in-patient at an undisclosed unit.
He is approved for escorted ground leaves, but his "engagement with staff fluctuates".
The Parole Board noted he is making progress, but said that "there is some distance for Mr Hussein to go before we could be satisfied that his release would not pose an undue risk to the safety of the community".
Parole was declined. He is scheduled to return before the board by November 30.
His statutory release date is September next year.
The drama started about 7am on March 15, 2012, when Hussein was disturbed in the grounds of Redwood School by caretaker Noel Batstone.
Hussein chased Batstone and a teacher, who barricaded themselves inside a classroom and phoned police.
He then hijacked 36-year-old mum-of-one Robin's pie delivery van and ordered her to drive off.
She told him to "get the **** out" of her delivery truck, but he forced her at knifepoint to drive him across Christchurch, and then stabbing her in the shoulder.
"I feared the worst. I thought I was going to die," she told the Herald that day.
Robin eventually managed to escape when Hussein was distracted at a traffic jam almost one hour later.
But the drama only escalated when Hussein left the truck near the busy intersection of Hoon Hay and Halswell roads and then almost fatally stabbed a city council worker, who has name suppression.
City construction worker Jade Lynn, 22, saw the attacker rampaging between vehicles and approached him with a crowbar, striking him in the neck, and herding him away from other members of the public.
Eyewitnesses described Lynn as a "hero" who prevented Hussein from attacking other bystanders.
Hussein was only stopped when pepper sprayed, Tasered and then shot twice by a police officer in his shoulder and wrist.
