New Zealand`s central bank left interest rates unchanged at 3.5 percent on Thursday, citing modest inflation despite above-trend economic growth.
The Reserve Bank of New Zealand said it was still gauging the impact of a series of rate hikes that raised its base rate from 2.5 percent to 3.5 percent between March and July this year.
"A period of assessment remains appropriate before considering further policy adjustment," Reserve Bank Governor Graeme Wheeler said in a statement.
The move was widely expected and financial markets do not predict any further rate rises until March next year at the earliest, with some analysts saying there could be no movement until late 2015.
The bank predicted last month that the economy would grow 3.7 percent in 2014.
Such strong growth would normally be expected to fuel inflation but data released last week showed the cost of living rose just 1.0 percent in the year to September, the bottom of the bank`s 1.0-3.0 percent target range.
"Contributing factors are subdued wage inflation, well-anchored inflation expectations, weak global inflation, falls in oil prices and the high New Zealand dollar," Wheeler said.
He added: "Growth in the New Zealand economy has been faster than trend over 2014, reducing unemployment and adding to demands on productive capacity."
Wheeler also repeated his view that the New Zealand dollar is overvalued. The currency has remained stubbornly high, despite repeated attempts by the bank to talk it down.
"Its current level remains unjustified and unsustainable and continues to constrain growth in the tradables sector," Wheeler said. "We expect a further significant depreciation."
The New Zealand dollar fell slightly from 78.15 US cents to 77.72 US cents after the announcement.
