NZ Interest Rate Steady at 8.25 Percent

Reserve Bank governor Alan Bollard said the outlook for the New Zealand economy and interest rates remained broadly consistent with the view outlined in the bank's September monetary policy statement.

"The labor market remains tight, domestic income growth continues to expand on the back of strong commodity prices and core inflationary pressures persist," Bollard said.

"On the other hand, there are signs the housing market is moderating," he added.

"Despite ongoing surpluses in the government's operating balance, fiscal policy is contributing to inflationary pressure. Any further easing in fiscal policy beyond that already announced will add further upside risks to medium-term inflation," he said.

Bollard said there were a number of upside risks, including the direct effects of New Zealand's proposed greenhouse emissions trading scheme and rising global food prices.

"While the turbulence in global financial markets has eased somewhat, considerable uncertainty remains," he said.

"This poses a downside risk for our key trading partner economies. In addition, the New Zealand dollar remains relatively high, restraining the externally focused sectors of the economy," he added.