New Zealand's central bank holds rates at record low

New Zealand's central bank left interest rates at a record low of 2.5 percent on Thursday and predicted they would remain there for the rest of the year.

The official cash rate (OCR) has been unchanged since March 2011 and the Reserve Bank of New Zealand (RBNZ) said there was little prospect of movement in 2013 amid an uneven economic recovery.

"There are both upside and downside risks to this outlook," RBNZ governor Graeme Wheeler said in a statement. "At this point we expect to keep the OCR unchanged through the end of the year."

He said a massive rebuilding programme in Christchurch was gaining momentum following the February 2011 earthquake that devastated the city, while residential investment and confidence in the economy were increasing.

However, he warned the high New Zealand dollar was hurting exports and drought was creating difficulties in much of the country.

Overall, Wheeler said the central bank expected annual economic growth of 2.0-3.0 percent and inflation to rise gradually to the middle of the 1.0-3.0 target band.

ns/jms