Wellington  - The governor of New Zealand's Reserve Bank, Alan Bollard, rebuked trading banks on Wednesday for raising interest rates on home mortgages even after the central bank dropped its benchmark rate to a record-low 3 per cent last month.

He issued a rare statement repeating that New Zealand's recovery from recession is expected to be very gradual: "In these circumstances we believe the rise in longer-term interest rates is unwarranted and inconsistent with the monetary policy outlook."

Bollard, who has cut the central bank's benchmark official cash rate six times since July from a record high of 8.25 per cent, said, "We are projecting interest rates to remain at relatively low levels for an extended period."

Analysts said that retail banks last week started lifting two-, three- and five-year mortgage rates above 6 per cent, while longer- term corporate borrowing rates also rose.

They blamed a scramble by borrowers to lock in fixed-term mortgage rates after years of lower floating rates, putting pressure on the so-called "swap" rates for interbank lending caused by the worldwide demand for cash. (dpa)