The Reserve Bank has held the Official Cash Rate at 5.5 percent.
The move is in line with what many economists predicted.
In a statement the Reserve Bank said the New Zealand economy had evolved broadly and core inflation and most measures of inflation had declined. The bank said the risks to the inflation outlook were now more balanced.
"Restrictive monetary policy and lower global growth have contributed to aggregate demand slowing to better match the supply capacity of the New Zealand economy.
"With high immigration and weaker demand growth, capacity constraints in the New Zealand labour market have eased.
"However, recent high population growth is supporting aggregate spending, as evident in upward pressure on dwelling rents, for example," the Reserve Bank said in a statement.
The bank then poured cold water on any hopes there might be a reduction in the OCR soon.
"The Committee remains confident that the current level of the OCR is restricting demand. However, a sustained decline in capacity pressures in the New Zealand economy is required to ensure that headline inflation returns to the 1 to 3 percent target.
"The OCR needs to remain at a restrictive level for a sustained period of time to ensure this occurs."
ANZ had predicted the Reserve Bank would raise the OCR to 5.75 percent, but the bank's chief economist Sharon Zollner said they were "very much in the minority."
Westpac, BNZ, ASB and Kiwibank all forecast no change to the OCR - but expect a potential rate cut in November this year.
The current Reserve Bank OCR track doesn't predict a cut in interest rates until late 2025.
Kiwibank says the rate can be cut earlier.
"The economy has contracted and may record a double dip, albeit shallow, recession," the bank said.
"Households have been hit by a cost-of-living crisis, a falling housing market and a rampant rise in interest rates. Consumption is weak."
