Herald economics editor Brian Fallow with his take on Alan Bollard's announcement to hold the cash rate steady.
Having managed in past few weeks to push back market expectations of when he will start to remove the monetary plaster cast, governor Alan Bollard is now pulling them forward again by changing the language from "the second half of 2010" to "around the middle of 2010."
Taken literally the latest language endorses where market pricing has moved to, but it is liable to be taken to indicate a tighter stance than he took just six weeks ago.
The banks' forecasts take a cheerier view of the outlook for household spending than in September.
But it qualifies this by saying a key uncertainty is the extent to which the recovery in house prices will flow through to consumer spending, that in any case it expects the surge in house price inflation to run out of steam, and that it sees no sign yet of a return to a debt-fuelled consumption boom.
And while it thinks unemployment is close to its peak - 6.7 per cent in the middle of next year form 6.5 per cent now - it expects the improvement in labour market conditions, when it comes, to flow through to more hours worked before to a lift in headcount.
The statement contains a clear message to the Government that the bank would like to see more restraint on public spending than this year's Budget had foreshadowed.
The more work fiscal policy does the less upward pressure there will be on interest rates and the exchange rate.
And it has renewed its plea for a "more neutral" tax system that encourages people to spend less and save more, and to invest their savings in something other than housing.
When asked if the Government was receptive to this message Bollard said "I hope so."
