The Reserve Bank of New Zealand on Thursday decided to hold its Official Cash Rate steady at 2.75 percent.
That was in line with expectations and it followed three straight meetings with a rate cut. That followed seven consecutive months with no change.
The OCR had been at a record low 2.50 percent since March 10, 2011 as the country dealt with the global economic slowdown.
It wasn’t until last March that the central bank felt confident enough in a recovery that it lifted the OCR.
“Global economic growth is below average and global inflation is low despite highly stimulatory monetary policy. Financial market volatility has eased in recent weeks, but concerns remain about the prospects for slower growth in China and East Asia especially. Financial markets are also uncertain about the timing and effects of monetary policy tightening in the United States and possible easings elsewhere,” RBNZ Governor Graeme Wheeler said in a statement accompanying the decision.
One of the biggest factors in the decision to hold steady was a rebound in the tourism and construction sectors, the bank said.
Low inflation also was a factor as the headline figure for consumer prices remains beneath the bank’s target range of 1 to 3 percent.
“CPI inflation remains below the 1 to 3 percent target range, largely reflecting a combination of earlier strength in the New Zealand dollar and the 60 percent fall in world oil prices since mid-2014,” Wheeler said.
The bank added that inflation is expected to return to the target range by early next year, although the higher exchange rate is likely to dampen trade.
The RBNZ added that further easing may be appropriate, depending on the results of forthcoming economic data.
“To ensure that future average CPI inflation settles near the middle of the target range, some further reduction in the OCR seems likely. This will continue to depend on the emerging flow of economic data. It is appropriate at present to watch and wait,” Wheeler said.
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