New Zealand Interest Rates On Hold

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New Zealand's official interest rate will remain unchanged at 2.50 percent.

The Reserve Bank of NZ announced Thursday that the Official Cash Rate (OCR) would hold steady at its record low level for a second straight month.

The move was widely anticipated by economic experts.

In a statement accompanying the rate decision, RBNZ Governor Alan Bollard said that despite signs of a leveling off in economic activity, the economy remains weak.

"We continue to expect to see a patchy recovery get underway toward the end of the year, but it will be some time before growth returns to healthy levels," Bollard said.

The Bank also hinted that interest rates could go even lower, if policy makers felt the economy needed further stimulus.

"We consider it appropriate to continue to provide substantial monetary policy stimulus to the economy," the statement said. "The OCR could still move modestly lower over the coming quarters. We continue to expect to keep the OCR at or below the current level through until the latter part of 2010."

Bollard said that inflation was currently well within its target bands and this was not expected to change in the medium term.

The RBNZ has slashed the OCR by 5.75 percent since July of 2008.

Recent government data shows New Zealand's unemployment rate at a five-year high of 5.0 percent for the first three months of 2009. In June, the RBNZ predicted the jobless rate could rise as high as 7.2 percent by the middle of 2010.

New Zealand's economy has been in contraction since Q1 of 2008, with last month's statement forecasting the recession to continue at least through the current quarter.

(Market News Provided by RTTNews)