New Zealand central bank interest rate unchanged

New Zealand''s Reserve Bank is holding official interest rates steady at 2.5 per cent, with the risk that the European sovereign debt crisis could see the global economy slow down and New Zealand export prices fall. Westpac Bank said it was sticking to its view that the Reserve Bank would keep rates on hold till June next year. The Reserve Bank took a slightly tougher line than it could have in today''s statement, Westpac said, given weaker developments of recent weeks could have warranted explicitly pushing out the timing of rate hikes. Reserve Bank Governor Alan Bollard said given the ongoing global economic and financial risks, it remained prudent to continue to keep the OCR on hold at 2.5 per cent for now. "However, if global developments have only a mild impact on the New Zealand economy, it is likely that gradually increasing pressure on domestic resources will require future OCR increases." The decision to hold rates was widely expected given ongoing concerns about the global economy, a big drop in business confidence yesterday, and lower than expected inflation figures out earlier this week. Economists said the Reserve Bank had time to "watch, worry and wait" given lower than expected inflation figures out earlier this week. New Zealand domestic activity continued to expand at only a "modest pace" despite relatively strong commodity prices the central bank said.