- RBNZ keeps rates at record low of 1.75 pct
- Signals rates on hold into 2020, longer than previously forecast
- NZ dollar drops to one-month low in response
(Adds detail, updates market reaction, adds analyst comment)
WELLINGTON, Aug 9 (Reuters) - The Reserve Bank of New Zealand (RBNZ) on Thursday kept the official cash rate (OCR) on hold at a record low of 1.75 percent and said rates would stay at that level into 2020, longer than it had previously predicted and pushing the currency lower.
"We expect to keep the OCR at this level through 2019 and into 2020, longer than we projected in our May Statement," said governor Adrian Orr in a statement accompanying its rates decision.
The central bank had forecast in its previous monetary policy statement in May that it would lift rates around the end of 2019.
The New Zealand dollar NZD=D4 dropped to a one-month low of $0.6710 in the wake of the announcement from around $0.6745.
The bank cut its annual GDP forecasts for 2019 to 2.6 percent from 3.1 percent in its previous monetary policy statement.
"The RBNZ had unrealistically strong GDP growth forecasts and they've recognised the slow down and reacted to it," said Dominick Stephens, chief economist at Westpac Bank.
Since the RBNZ's previous rates decision in June, business confidence has sunk to decade lows, raising concerns about firms holding off on investment, which could then weigh on activity and slow growth in gross domestic product (GDP).
"Risks remain to our central forecast," Orr said. "The recent moderation in growth could last longer. Low business confidence can affect employment and investment decisions."
The bank cut its annual GDP forecasts for 2019 to 2.6 percent from 3.1 percent in its previous monetary policy statement.
Nevertheless, the bank highlighted "welcome" early signs that core inflation was moving towards the bank's target midpoint of 2 percent, supported by capacity pressures.
