KEY POINTS:
Governor Alan Bollard's statement this morning is grimmer, sterner and more hawkish than the one he delivered seven weeks ago.
But once again his concerns about the medium-term inflation outlook have not been enough to push him over the line and raise the official cash rate from 7.25 per cent.
He now says it is "likely" further tightening will be required unless there are clear indications of a domestic slowdown, especially in housing. Last month all he said was that a further tightening could not be ruled out.
He has reiterated December's warning to the politicians that the prospect of a more expansionary fiscal policy has joined consumer spending and the housing market a month amomg the factors that make the bank increasingly "uncertain" about its fundamental assumption that the domestic side of the economy is cooling.
As for the export side, it does not rate a mention this time, despite the dollar hovering close to US70c again in the past few days.
So while Dr Bollard acknowledges that the short-term inflation outlook is "relatively benign" the overarching message remains that we are not out of the inflation woods yet and that the possibility of another interest rate or more than one remains on the table.
