Wellington, Nov 29 (IANS): The Reserve Bank of New Zealand's Monetary Policy Committee agreed on Wednesday to maintain the official cash rate (OCR) at a restrictive level of 5.5 percent that it has been since May.

The Monetary Policy Committee agreed that interest rates will need to remain at a restrictive level for a sustained period of time so that consumer price inflation returns to target and supports maximum sustainable employment, reports Xinhua news agency.

"Interest rates are restricting spending in the economy and consumer price inflation is declining, as is necessary to meet the committee's remit. However, inflation remains too high, and the committee remains wary of ongoing inflationary pressures," the committee said in a statement.

Internationally, economic growth has been stronger than was expected at the start of this year but remains below trend and is likely to slow further.

This subdued growth outlook will continue to restrain New Zealand's export revenues, it said.

In New Zealand, demand growth has eased, but by less than anticipated over the first half of 2023 in part due to strong population growth, the statement said, adding the OCR will need to stay restrictive, so demand growth remains subdued, and inflation returns to the 1 to 3 per cent target range.

The committee is confident that the current level of the OCR is restricting demand.

However, ongoing excess demand and inflationary pressures are of concern, given the elevated level of core inflation, it said, adding if inflationary pressures were to be stronger than anticipated, the OCR would likely need to increase further.