New Zealand reserve bank keeps official cash rate on hold

New Zealand's Reserve Bank on Thursday kept the Official Cash Rate (OCR) unchanged at 2.5 percent in its latest review of interest rates. The bank expects to keep the key interest rate at the record low of 2.5 percent for the rest of the year. Reserve Bank Governor Graeme Wheeler said on Thursday the economy is picking up but remains uneven. Wheeler said inflation remained low and, despite having fallen over the past few weeks, the New Zealand dollar remains overvalued and is hurting exporter returns. In his statement, he reiterated his warning about surging house prices. "Rapid house price inflation persists in Auckland and Canterbury. As previously noted, the Reserve Bank does not want to see financial or price stability compromised by housing demand getting too far ahead of the supply response," he said. The bank expects GDP growth to accelerate to about 3.5 percent by the second half of 2014, and inflation to rise towards the midpoint of the 1 percent - 3 percent target band. Wheeler said that given this outlook, the bank expected to keep the OCR unchanged through the end of the year. The OCR has remained at 2.5 percent since March 2011.