The Reserve Bank did not announce any change in interest rates, thus keeping the official cash rate (OCR) at its earlier level of 2.5 percent. The RB Governor said that house prices may rise in future, but the bank will take every step to avoid any risk due to unexpected rise in housing sector.

Dr. Bollard, after the Monetary Policy Review meet, indicated that the ORC might remain at existing level for next few months, and it would be revised only after taking stock of the global financial scenario.

ASB economists Nick Tuffley and Jane Turner said that the Reserve Bank has been playing the role of a spectator, as indicated by its decision to accept the current levels of the NZ dollar and interest rates.

Dr. Bollard said that economic recovery may take some time, warning against weak medium-term growth outlook for the period ahead. He added: "Business profits are under pressure because of the low level of activity and the elevated New Zealand dollar; this limits the scope for employment and investment to rebound quickly."

House prices in the country rose 4.4 percent in the past four months, primarily, due to tight housing supply; and may go further up for the remaining period of current financial year, given the supply constraints.

The RB Governor added: "We are looking at a fragile housing recovery off a trough, but we wouldn't want to overstate it. It's a story about only very limited increases in prices."