OCR unchanged, pick-up in economy may drive early rate hike

"The economy continues to recover, reflecting improved world growth, higher expert commodity prices, increased government spending and housing strength," Bollard said in Wellington today.  

He dropped his insistence that rates will stay low until the second half of next year saying the economy was returning to growth.

"Conditions may support beginning to remove the monetary stimulus around the middle of 2010," he said.

The central bank will have to walk a fine line over stoking economic activity without over-egging it as inflation begins to speed up ahead of Bollard's expectations and the housing market continues to show signs of emerging from the lethargy of the past 18 months.