KEY POINTS:
Reserve Bank governor Alan Bollard looks set to play Scrooge this Christmas by keeping interest rates high and a "bah humbug" message on the likelihood of an early rate cut.
Most economists expect Bollard, at the release of the monetary policy statement on Thursday, to keep the official cash rate at 7.25 per cent.
His stance is expected to remain "hawkish" in the face of persistent inflationary pressure and an economy that keeps chugging along.
ASB Bank economist Chris Tennent-Brown said activity remained "frustratingly high" for the Reserve Bank, which is charged with returning annual inflation to within a 1 to 3 per cent range after being outside the band for just over a year.
The housing sector remains strong, as does retail. "But really I think if they were in the mood to do something about that by changing monetary policy they would have done it at the last meeting," he said.
This time round, the New Zealand dollar is at 10-month highs, which should help relieve inflationary pressures.
While most economists agree the rate won't change, opinions vary on when the central bank will start to ease.
Goldman Sachs JB Were economist Shamubeel Eaqub said there were many unknowns.
"Certainly the cycle has been a big surprise to us and I think to most market participants, particularly as to how resilient the economy has been," he said.
Economic data for the 12 months to July had surprised on the downside, but since then the data had been more optimistic. Lower petrol prices should likely see inflation drop back in the December quarter, but whether within the band is debatable.
