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New Zealand's central bank said Thursday it would hold the official interest rate at a record low 2.5 percent and signalled the first rise was likely around the middle of the year.
Reserve Bank of New Zealand Governor Alan Bollard said the New Zealand economy was recovering and growth should rise further through this year.
"Trading partner activity has recovered a little faster than expected," Bollard said.
"At the same time, risks around the global outlook have increased, although not to the extreme levels seen at the height of the (global financial) crisis," he added.
New Zealand slumped into recession at the start of 2008, emerging only in the second half of last year with weak growth of 0.2 percent in each of the last two quarters.
"We estimate the New Zealand economy grew at a stronger pace in the December and March quarters than in the prior two quarters," Bollard said.
"Looking forward, while growth is expected to increase to about four percent next year, this is subdued relative to previous recoveries."
Although household spending had risen, house sales and credit growth remained subdued, and business spending was weak despite improved confidence.
"We continue to expect to begin removing policy stimulus around the middle of 2010," Bollard said in an outlook which has been unchanged since late last year.
