New Zealand's central bank held its Official Cash Rate (OCT) steady at 2.5 percent, as expected, saying inflation remains subdued but it expects economic growth to strengthen during the year and it was keeping an eye on house price inflation and household credit for signs of inflation risks. The Reserve Bank of New Zealand (RBNZ), which has held its rate steady since March 2011, said global growth was set to recover this year and financial markets were accordingly positive, which was helping the lower bank funding costs and interest rates for households and firms. "Domestically, recent data on business confidence and construction activity suggests GDP growth is recovering from the softness seen through the middle of last year," the bank said in a statement, quoting its governor, Graeme Wheeler. "Overall, we expect economic growth to strengthen over the coming year, reducing spare capacity and bringing inflation slowly back towards the 2 percent target midpoint," Wheeler said. New Zealand's Gross Domestic Product expanded by 0.2 percent in the third quarter from the second for annual growth of 2.0 percent, down from 2.6 percent in the second quarter.
updated Jan 30, 2013
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