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With the economy in a holding pattern while inflationary and recessionary forces grapple for ascendancy, the Reserve Bank's forecasts will hold more interest than the actual rate call on Wednesday.
Another 50-basis-point hike to the Official Cash Rate - taking it to 3 per cent - is considered anear certainty by economists.
"That's been a settled matter for some time, says Westpac chief economist Michael Gordon.
"Even if the Reserve Bank hadn't repeated its wording around tightening monetary conditions 'at pace' in its July review, the need for a continued strong response to inflation has been all too apparent."
The bigger question was now around what the RBNZ signalled for the path ahead, he said.
"The outlook is becoming more mixed, with activity softening but inflation pressures even stronger than expected. What's more, financial markets are now trying to front-run the central bank in the other direction, pricing a lower peak in the OCR cycle and a turn to rate cuts as early as August next year."
To push back, the RBNZ would need to keep emphasising its inflation-fighting credentials, he said.
"Its task requires not just lifting interest rates to a certain level, but holding them there for long enough to do their job of bringing demand back into line."
Any softening in the RBNZ's tone could see market interest rates fall even further, which would risk undermining the good work the RBNZ has done, he said.
ANZ chief economist Sharon Zollner agreed that the RBNZ is likely to strike "a hawkish tone".
"On balance, the data flow, while certainly not one-sided, has come in more inflationary than the RBNZ forecast in May. For that reason, one can't rule out a 75bp hike, but this far into the cycle, the RBNZ can deliver the tightening it needs with a 50bp hike, a firm forecast OCR track, and some staunch messaging."
This economic cycle had been marked by extreme volatility in financial markets, and data outcomes which had been miles away from expectations, said BNZ head of research Stephen Toplis.
"Yet amongst all the noise, once everything is thrown into the mix, the outlook for New Zealand inflation and the labour market is little changed from what the Reserve Bank was looking at when it delivered its July Monetary Policy Review or, for that matter, its May Monetary Policy Statement."
Since higher than expected annual inflation in the June Consumer Price Index (at 7.3 per cent compared with the Bank's pick of 7 per cent), there had "been clear signs this upside surprise will be fully reversed over the following six months", he said.
"The key to this is slumping petrol prices but we are also expecting significant downside pressure from the widespread drop in global commodity prices that is occurring."
Wage inflation would remain above RBNZ forecasts for a while, he said.
"We also think wage pressure will continue to keep non-tradables inflation elevated. But how long will that pressure last in the event the unemployment rate continues to move higher?
"So again, looking through the noise, it seems there is insufficient information in the labour data to indicate the Reserve Bank's previously published rate track should be materially adjusted."
ANZ Bank chief economist Sharon Zollner. Photo / Dean Purcell
ANZ's Zollner noted that house prices were down around 7 per cent from their peak, with flow-on impacts on construction indicators.
"So monetary policy is definitely working," she said. "But so far, although the spending data is all over the shop (so to speak), it's fair to say that it hasn't slowed nearly as much as dire consumer surveys would suggest."
Anecdotal evidence suggested consumers were reprioritising spending "but not slamming wallets shut yet".
"Monetary policy takes time to feed through the economy," she said. "But one thing's for sure: with inflation so high and broad-based, and wages rising fast, under a least-regrets framework the RBNZ can't afford to make optimistic assumptions about the degree of effective monetary tightening it is delivering."
