OCR unchanged at 2.5 percent

Announcement by RBNZ NEWS RELEASE - 28th of January 2010 - 9:24 AM

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.



Reserve Bank Governor Alan Bollard said:  "The outlook for the New
Zealand economy remains consistent with the projections underlying the
December Monetary Policy Statement.



"Global activity continues to recover, helping push New Zealand's
export commodity prices higher. Economic growth is most apparent in
China, Australia, and emerging Asia.  However, sustained growth
throughout our trading partners is not assured, with many still facing
impaired financial sectors and overall activity still reliant on policy
support.



"Similarly, the New Zealand economy continues to recover.  Policy
stimulus and improving export earnings have seen a pickup in household
spending.  That said, households remain cautious, with credit growth
subdued.  Business spending remains weak.



"Annual CPI inflation is currently at the centre of the target band,
and is expected to track comfortably within the band over the medium
term.



"The economy is being assisted by both monetary and fiscal policy
support.  As growth becomes self sustaining, fiscal consolidation would
help reduce the work that monetary policy might otherwise need to do.



"If the economy continues to recover in line with our December
projections, we would expect to begin removing policy stimulus around
the middle of 2010."