OCR unchanged at 2.5%

This is in contrast to the markets which have been suggesting rate rises early next year.

In the statement he said: "As we have said previously, the forecast recovery in economic activity is based on monetary policy continuing to provide substantial support to the economy. We expect such support will be needed for some time. "As a result, we continue to expect to keep the OCR at or below the current level through until the latter part of 2010."

Bollard said the kiwi dollar's strength is a threat to the recovery.

"If the exchange rate were to continue its appreciation and/or the recovery in house prices were to undermine the improvement in household saving then the sustainability of the present recovery will be bought into questions," Bollard said in Wellington today. He retained the bank's easing bias, saying the OCR would have to remain at or below current levels through until the second half of 2010.