Rates left unchanged over stimulus effect concerns

"While interest rates are likely to increase over the next two years, for now it seems prudent to keep the OCR low until the recovery becomes more robust," said Bank Governor Alan Bollard.

ASB economist Jane Turner said that while the rate decision was unsurprising, "the tone of the statement was more dovish than we had expected."

She said the big change in the statement "was less in the forecasts, but more in how the RBNZ is viewing the effectiveness of interest rates on activity."

"In observing the weakness in activity, the RBNZ has concluded that monetary policy settings are providing less stimulus to the economy  that previously assumed, and hence the substantial change in view on the interest rate outlook despite  the relatively unchanged view on medium-term growth," she said.