Reserve Bank of NZ holds cash rate at 5.5 per cent

Consumers price index (CPI) inflation peaked at 7.3 per cent in June, and was last measured at 5.6 per cent in the year to September.

"Interest rates are restricting spending in the economy and consumer price inflation is declining, as is necessary to meet the committee's remit," RBNZ governor Adrian Orr said.

"However, inflation remains too high, and the committee remains wary of ongoing inflationary pressures. 

"Demand growth has eased, but by less than anticipated over the first half of 2023 in part due to strong population growth.

"The OCR will need to stay restrictive, so demand growth remains subdued, and inflation returns to the one to three per cent target range."

A hold at the November meeting was tipped by every major New Zealand bank.

The RBNZ also updated its future OCR track, upping projections to include a likely rate rise in early 2024.

While CPI inflation is forecast to return to the target band by September next year, the bank has not predicted it will cut rates until 2025.

The OCR is already at its highest level since November 2008, the aftermath of the global financial crisis.

Central bank economists also believe unemployment - currently at 3.9 per cent - will continue to climb, ticking up each quarter to hit 5.1 per cent at year's end.

There is some good news from fresh economic proejctions: the bank believes NZ will avoid recession this year.

It now tips GDP growth of 0.3 per cent and a flat quarter in the back half of 2023, before a return to heartier growth in 2024.

The country was understood as in recession earlier this year until revised Stats NZ figures showed shallow GDP growth was in fact a flat quarter. 

This week's review was the last opportunity to change the OCR this year, with the RBNZ not due to meet again until February.