Reserve Bank of New Zealand has left the official cash rate at 2.25 percent, saying it needs to get inflation under control without upsetting the economic rebound.

The decision was widely expected.

Inflation reached 3.1 percent at the end of last year, above the RBNZ’s target band.

“The committee is confident that inflation will fall to the 2 percent midpoint over the next 12 months due to spare capacity in the economy, modest wage growth, and core inflation within the target band,” the Monetary Policy Committee said.

It said the recovery was uneven and would be gradual, with a muted housing market, cautious domestic consumption, low migration, slow wage growth and a weak labour market weighing on inflation.

But it noted a gradual fall in retail interest rates was feeding into household budgets and could spur stronger activity, with businesses looking to increase prices and keep up inflation.

“If the economy evolves as expected, monetary policy is likely to remain accommodative for some time.”

“The committee will continue to assess incoming data carefully. As the recovery strengthens and inflation falls sustainably towards the target midpoint, monetary policy settings will gradually normalise.”

New governor Anna Breman has said the Bank has a “laser focus” on low inflation.

Forecasts pointed to the next OCR move most likely being a rise early next year.

For Hibiscus Coast households and businesses, the OCR hold should keep borrowing costs broadly steady for now.

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