The Reserve Bank of New Zealand said that while economic growth was expected to rise to 2.5-3.0 percent over the next two years "on balance, it remains appropriate for the OCR (official cash rate) to be held at 2.5 percent".

Central bank governor Graeme Wheeler said reconstruction efforts in Christchurch, where an earthquake in February 2011 killed 185 people, were gathering pace and were set to lift the flagging domestic economy.

He said the bank was monitoring for any spike in inflation caused by the NZ$30 billion (US$24.8 billion) rebuild that could take price rises beyond its 1.0-3.0 target range.

"With the reconstruction-driven pick-up in investment now clearly underway, the bank will also continue to watch for a greater degree of inflation pressure than is assumed," Wheeler said in a statement.

He added that the global outlook "remains soft but appears less threatening" than earlier this year and noted the high New Zealand dollar was restricting export earnings and driving demand for imports.

Interest rates in New Zealand have been unchanged since March last year, when the bank lowered them to help cushion the economy from the impact of the Christchurch earthquake.