The Reserve Bank (RBNZ) has held its cash rate unchanged, as expected, and dropped mention of rates cuts amid reasonable economic growth and stronger inflation.
Reserve Bank of New Zealand Photo: RNZ / Alexander Robertson
The official cash rate (OCR) was held at a record low 1.75 percent, where it has been since late 2016.
Governor Adrian Orr said it was possible the economy may go through a soft patch in the near term, but then pick up through next year on the back of a strong labour market and domestic activity.
However, he said there were challenges at home and abroad that justified keeping rates unchanged.
"We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation."
"We expect to keep the OCR at this level through 2019 and into 2020."
The statement dropped explicit reference to the chance of a rate cut, which had been in recent statements, but said the direction and timing of future moves would depend on economic data.
Mr Orr noted core inflation pressures were picking up, but were still below the central bank's 2 percent target, which supported "continued supportive monetary policy".
He said ongoing spending and investment, by both households and government, would support economic growth, but there were risks.
"Weak business sentiment could weigh on growth for longer. Trade tensions remain in some major economies, raising the risk that trade barriers increase and undermine global growth," Mr Orr said.
An economist said the statement was much as expected.
"We continue to expect the RBNZ to remain on hold into the first half of 2020, though the risk is a later start given the moderate growth outlook and still-benign wage and core inflation trends," said ASB's chief economist Nick Tuffley.
The New Zealand dollar, which had risen strongly the day before when unemployment hit a 10-year low, fell slightly because of the reduced chances of a rate cut.