While there was a risk of the central bank softening its commentary in yesterday's OCR review, it instead held firm to its December monetary policy statement line, he said.
Reserve Bank governor Alan Bollard said while interest rates were likely to increase modestly over the next two years, for now it seemed prudent to keep the OCR low until the recovery became more robust and underlying inflationary pressures showed more obvious signs of increasing.
The outlook for the New Zealand economy remained consistent with the projections underlying the December statement.
Domestic economic activity was weaker than forecast through the second half of 2010. September quarter gross domestic product declined unexpectedly and retail spending appeared to have fallen in the December quarter, he said.
"Trading partner activity continues to expand and New Zealand's export commodity prices have increased further. Within New Zealand, business confidence, across a range of industries, has picked up and imports of capital equipment have grown.
"Furthermore, there are tentative signs that housing market activity has stabilised after having trended lower for some months," Dr Bollard said.
The BNZ remained with its picking of June for the next lift in the OCR with a 4.25% target at the end of the year and a 5% peak by mid-2012.
ASB economists are picking September as the earliest the OCR will move with a peak of 4.5% in July next year.
