Borrowers can forget about any reprieve from high interest rates, despite signs the economy is cooling, economists say.
The Reserve Bank is widely expected to leave rates on hold when it reviews its official cash rate on Thursday, and is likely to remain tight-lipped about when rates can start to
come down.
Inflation was at 2.8 per cent in the year to June, not far from the top end of the Reserve Bank's 1 to 3 per cent range.
While economists largely expect an action replay of the Reserve Bank's last statement in June, when it said there was no scope for easing rates in the foreseeable future, the tenor of the bank's comments will be important.
Economists say data is pointing to a slowdown in the economy, which should ease inflationary pressure, but lower rates are still seen as some way off.
UBS New Zealand economist Robin Clements said the market was eager to assess which way the bank was leaning.
"I suspect it might be a message recognising some weakness in the data but also that the economy is still tight," he said.
"There is not really a lot of reason or rationale for them to pull the trigger to tighten, but by the same token there is probably no interest from their point of view being seen to step back."
ASB Bank chief economist Anthony Byett said though data pointed to a slowdown there were a number of signs that spending had persisted.
The import bill for May was high and some of the lending at the moment was going through at a pretty good clip, he said.
