The Reserve Bank has kept its benchmark interest rate on hold and says it will stay that way for the foreseeable future.
Photo: RNZ
As expected, the central bank held the Official Cash Rate (OCR) at 1.75 percent - the rate it has been since November last year.
In his review of the OCR this morning, acting governor Grant Spencer kept to previous reasoning for leaving rates unchanged.
He said the economy was growing at a reasonable rate on the back of strong immigration and commodity prices.
"Growth is projected to maintain its current pace ... supported by accommodative monetary policy, population growth, elevated terms of trade, and fiscal stimulus."
Mr Spencer said the heat was coming out of the housing market, because of loan-to-value ratios and higher rates, but it could reignite if the restrictions were eased.
He also said the economy would benefit from a lower exchange rate.
However, inflation was expected to ease further from the current rate of 1.7 percent, before starting to pick up again and settling around the bank's 2 percent target.
Mr Spencer said there were also a few uncertainties around the world, all of which justified the central bank leaving rates steady.
Analysts expect the next move to be a rise, but probably not for another 12 months.
"The key message is the [Reserve Bank] has maintained its neutral stance. There is a hint the growth outlook may have been tweaked down very slightly," said ASB chief economist Nick Tuffley, who expected a rate rise in early 2019.
Today's review was the first by Mr Spencer, who took over from former governor Graeme Wheeler this week, and will be in the job for six months, until a permanent replacement is appointed. Mr Wheeler left this week after one five-year term.