The Reserve Bank of New Zealand on Thursday kept its Official Cash Rate unchanged at the record low of 1.75 percent for the ninth straight meeting.
The decision was in line with expectations following a 0.25 percent rate cut in November 2016.
The central bank has pared a collective 0.50 percent from its benchmark in the last 18 months, lowering the rate in six of the last 18 meetings after six straight sessions with no change.
The global economy has continued to improve in recent months, RBNZ Governor Graeme Wheeler noted.
“While global inflation remains subdued, there are some signs of emerging pressures. Commodity prices have continued to increase, and agricultural prices are picking up. Equity markets have been strong, although volatility has increased. Monetary policy remains easy in the advanced economies but is gradually becoming less stimulatory,” Wheeler said in a statement accompanying the decision.
He also noted that commodity prices have continued to increase, while equity markets have been firm, if volatile.
But economic growth has slowed somewhat, prompting the central bank to keep the monetary policy unchanged.
“GDP was weaker than expected in the fourth quarter, mainly due to weather effects on agricultural production. Growth is expected to strengthen, supported by accommodative monetary policy, a high terms of trade, government spending and population growth. Labor market conditions are projected to tighten further,” Wheeler said.
Annual inflation is expected to weaken further but remain well within the target range, the bank said.
Longer term inflation is anchored at around 2 percent.
“Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain, and policy may need to adjust accordingly,” Wheeler said.