The New Zealand dollar and wholesale interest rates spiked higher after the Reserve Bank left its official cash rate (OCR) unchanged at 1 per cent.

Market expectations were weighted towards a rate cut at today's monetary policy statement.

ASB chief economist Nick Tuffley described the decision as a surprise.

"To us, the RBNZ's new growth outlook still appears too rosy," he said.

"We continue to expect the OCR will eventually fall to 0.5 per cent. The most likely timing is the February and May MPS releases."

At its current level, the OCR is at its lowest point since the Reserve Bank introduced it in March 1999, when it was set at 4.5 per cent.

The New Zealand dollar rallied to US64.10c from US63.3c just before the 2 pm announcement.

In the interest rate markets, the key two year swap rate jumped by 18 basis points to 1.22 per cent on the news.

Imre Speizer, senior markets strategist at Westpac, said the foreign exchange and interest rate markets were positioned for a cut.

"The market reaction clearly showed the positioning was clearly the wrong way around," he said.

"It was expected to be a rate cut so the interest rate traders would have gone into it betting on a fall," he said. "And Kiwi traders would have been short Kiwi," he said.

"This goes very much against the grain of what almost all the analysts expected on the day," he said.

The Reserve Bank, in its statement, said further monetary stimulus would be added if needed.

It said employment remained around its maximum sustainable level while inflation remained below the 2 per cent target mid-point but within its target range.

"Economic developments since the August statement do not warrant a change to the already stimulatory monetary setting at this time," it said.

Economic growth continued to slow in mid-2019 reflecting weak business investment and soft household spending.

The bank expects economic growth to remain subdued over the remainder of the calendar year.

Trading-partner growth had also slowed.

"Growth in global trade and manufacturing is weak and uncertainty remains high, dampening global business investment," the RBNZ said.

"However, New Zealand's export commodity prices have been robust, underpinning a positive terms of trade".

The lower New Zealand dollar exchange rate this year was also providing a "useful additional offset" to the weaker global economic environment.

"Interest rates will need to remain at low levels for a prolonged period to ensure inflation reaches the mid-point of our target range and employment remains around its maximum sustainable level," it said.