Uncertainty remains certain

"We are still feeling our way through a thick fog, in unchartered waters, that only the benefit of much more time will make clear," it says.

It suggests that while "everyone and their dog" expects the Reserve Bank will leave the Official Cash Rate (OCR) at 2.50% on Thursday, the bank will "stand its ground amid overly excited markets" and reiterate its cautious tones. BNZ Capital is also hopeful it might continue intimating that it expects rates will be kept "at or below" the current level until the latter part of next year.

While most believe a change in the OCR is unlikely, the ASB Business Weekly suggests now would, in fact, be a good tactical time to make a cut, particularly with markets implying increases from early 2010.

However, it says that for that to happen, the RBNZ would need to believe that further stimulus is needed; accept it has lost its ability to push short-term rates lower; but still believe that an OCR cut might still have some wider effect. It points out that while there are many positive signs in the economy, the strong NZ dollar is undermining the economic outlook.