New Reserve Bank governor Graeme Wheeler has left the benchmark interest rate unchanged at a record low of 2.5%.
In the bank's latest interest rate decision on Thursday, Mr Wheeler said the global economy remained fragile but market sentiment had improved.
He shrugged off the recent fall in the inflation rate to 0.8% - a level below the central bank's target range of 1% to 3% - and said it remains appropriate to keep the official cash rate (OCR) on hold.
"We will continue to monitor inflation indicators, such as pricing intention and inflation expectation data, closely over coming months," he said in a statement.
The governor said New Zealand's GDP continues to expand at a modest pace.
"Housing market activity is increasing as expected, and repairs and reconstruction in Canterbury are boosting the construction sector.
"Offsetting this, fiscal consolidation is constraining demand growth, and the high New Zealand dollar is undermining export earnings and encouraging substitution toward imported goods and services."
Picked to stay this way till next September
The OCR, which dictates mortgage rates charged by commercial banks, has been at 2.5% since 10 March 2011.
The dollar rose after the announcement to US82.1c by midday, which ASB chief economist Nick Tuffley says was due to some in the markets pencilling in the chance of a rate cut.
Mr Tuffley says if inflation looks like it is going to be slower to pick up, and the economic situation in Europe worsens, the Reserve Bank may leave interest rates on hold for longer than it might have expected.
"Our view is that rates will essentially remain on hold for upwards of a year through to about September next year," he says.
While weak inflation could have an effect in the short term, activity in construction and housing could push the cash rate up.