OCR unchanged at 2.50%

"The level of the dollar in particular, is not helping the sustainability of future growth and brings with it additional economic risks," Bollard said in Wellington today, referring to the surge in the New Zealand dollar over the past four months which has hindered the prospect of a desired export-led recovery. "The outlook remains highly uncertain" with the rise in global commodity prices not flowing into the raw materials produced domestically and "it will be some time before growth returns to healthy levels," he said.

Exporters say the resilient kiwi dollar, which has climbed about 33% from its lows in March, is eroding returns in already weak world markets. Fonterra Cooperative Group chair Henry van der Heyden said the exchange rate was putting downward pressure on milk prices as he announced a steady outlook on prices yesterday.

"The strength in the NZ dollar continues to undermine the economic outlook, and we continue to see the case for further stimulus," said Jane Turner, economist at ASB Bank, in a report before the announcement.

The New Zealand dollar traded at 64.96 U.S. cents, from 65.70 cents immediately before the release. The trade weighted-index fell to 61.14 from 61.68 before the report. Exports for the month of June fell 11% to $3.2 billion from the same month a year earlier.