New Zealand leaves interest rates at record low

[WELLINGTON] New Zealand's central bank left its base rate at a record low of 1.75 per cent Thursday and said it was set to remain there long term if inflation remains on target.

The decision was widely anticipated by the markets, which do not expect the official cash rate (OCR) to move until mid-2018 at the earliest amid a positive economic outlook.

"Longer-term inflation expectations remain well-anchored at around 2.0 per cent," central bank governor Graeme Wheeler said.

"Monetary policy will remain accommodative for a considerable period." Inflation was 1.3 per cent in the final quarter of 2016, the first time in two years it had reached the bank's 1.0-3.0 per cent target band.

Mr Wheeler shrugged off lower-than-expected economic growth of 0.4 per cent over the same quarter, saying it was partly due to temporary factors.

"The growth outlook remains positive, supported by on-going accommodative monetary policy, strong population growth, and high levels of household spending and construction activity," he said.

AFP