Further evidence OCR won't rise soon as inflation expectations fall

The latest indicator is businesses' inflation expectations fell for a fourth successive quarter as expectations of growth also deteriorated, according to the Reserve Bank's latest survey.

The survey outcome reinforces the likelihood that the central bank will keep interest rates on hold for an extended period - some aren't ruling out the chance of a near-term cut if news from the Eurozone worsens, but most expect the next move to be a rise in the official cash rate (OCR) in March or June next year.

"Over the past few weeks, economic developments would have led most to lower their growth expectations," says Jane Turner, an economist at ASB Bank. These developments include the sharp fall in commodity prices and "the stubbornly elevated level of unemployment," she says.

Turner notes the survey was conducted before Greece's failure to form a government and the growing prospect it will reject its bailout terms exacerbated concerns about the global economic outlook.