New Zealand central bank leaves rates on hold

[WELLINGTON] New Zealand's central bank left the official cash rate at a record low of 1.75 per cent on Thursday, saying modest interest rates would help spur economic growth.

Gross domestic product (GDP) rose just 0.6 per cent in the last quarter of 2017 and the Reserve Bank of New Zealand said monetary policy would play a role in stimulating the economy.

"GDP was weaker than expected in the fourth quarter, mainly due to weather effects on agricultural production," Governor Grant Spencer said in a statement.

"Growth is expected to strengthen, supported by accommodative monetary policy, a high terms of trade, government spending and population growth," he said.

The base rate has remained unchanged since November 2016, when it was cut from 2.0 per cent, and analysts do not expect it to move any time soon.

Capital Economics' Paul Dales predicted no movements until the second half of 2019, while Annette Beacher of TD Securities said a hike was possible in November this year.

AFP