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New Zealand’s central bank on Wednesday held its benchmark interest rate at a record low, saying that further depreciation of the kiwi is necessary to “achieve more balanced growth”.

The Reserve Bank left the official cash rate unchanged at 1.75 per cent, where it has been since last November. The decision matched economists’ expectations.

“Macroeconomic indicators in advanced economies have been positive over the past two months,” said governor Graeme Wheeler “However, major challenges remain with ongoing surplus capacity in the global economy and extensive geopolitical uncertainty”.

Mr Wheeler added that the trade-weighed exchange rate of the New Zealand dollar had fallen 4 per cent since February, “partly in response to weaker dairy prices and reduced interest rate differentials”. He said that while the fall was an “encouraging move”, a greater drop would be needed to support the economy.

“Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly,” he said.

The kiwi was up 0.2 per cent against the US dollar after the decision.

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