The Reserve Bankof New Zealand said it decided to maintain the official cash rate at 2.25%, as headline inflationremains low and core inflation remains within the target range.
The New Zealand central bank, however, said further policy easingmay be needed to make sure that future average inflation settles near the middleof the target range.
The central bank added that strong inward migration, constructionactivity, tourism and accommodative monetary policy supported the economy.
Long-term inflation expectations were well-anchored at 2%, thoughthere was a material decline in shorter-term expectations. The central bank expectsinflation to strengthen as the effects of low oil prices drop out and as capacitypressures gradually build.