Wellington (dpa) - New Zealand's central bank left its benchmark
interest rate at 8.25 per cent cent in a scheduled review Thursday of
monetary policy and said it was likely to remain at that level "for a
time yet" to keep a lid on inflation.

The Reserve Bank's official cash rate (OCR) has been at 8.25 per
cent - one of the tightest monetary policies in the developed world -
since July in a bid to dampen a booming housing sector and contain
inflation within the target range of 1 to 3 per cent.

Bank Governor Alan Bollard said that economic activity had weakened
amid sharp drops in consumer and business sentiment, exacerbated by
tighter credit conditions, a further decline in the housing market and
weaker prospects for world growth.

He said that financial market turbulence around the world continued
to add to an uncertain economic environment, and a very dry summer in
New Zealand weakened short-term growth prospects.

"However, the labour market is still strong, and New Zealand's key international commodity prices remain high," Bollard said.

Government spending plans and the possibility of personal tax cuts
in next month's budget could also limit the economic slowdown, he said.

"However, short-term inflation is likely to remain persistently
high, due in large part to repeated increases in food and energy
prices," Bollard said.

"Given this outlook, we expect that the OCR will need to remain at
current levels for a time yet to ensure inflation outcomes of 1 to 3
percent on average over the medium term." (dpa)