New Zealand's central bank has kept the official cash rate on hold but struck a decidedly dovish note in commentary, bringing hope for cuts on the horizon.
On Wednesday, the Reserve Bank of New Zealand (RBNZ) opted to hold the OCR in place at 5.5 per cent for the seventh consecutive meeting.
The latest hold extends pain for mortgage-holders, suffering under the highest interest rates for 16 years.
It was not a surprise, with all mainstream outlets predicting no change, including ABS Bank's chief economist Nick Tuffley.
"People need to hang in a little bit longer (for rate cuts)," he told Newstalk ZB.
Inflation remains high in New Zealand.
The all-important consumers price index (CPI) inflation was last measured at 4.0 per cent for the March quarter, down from a peak above 7.0, and just outside of the RBNZ's target band of 1-3 per cent.
RBNZ Governor Adrian Orr acknowledged the drop in comments alongside the decision.
"Restrictive monetary policy has significantly reduced consumer price inflation," he said.
Mr Orr cited "receding domestic pricing pressures", "lower inflation for imported goods and services" and easing labour market pressures.
"There are signs inflation persistence will ease in line with the fall in capacity pressures and business pricing intentions," he said.
"The (RBNZ) agreed that monetary policy will need to remain restrictive. The extent of this restraint will be tempered over time consistent with the expected decline in inflation pressures."
Mr Orr's comments were in stark contrast to those made alongside the previous meeting in May, when he suggested a first rate cut may not be until late 2025 - and that a hike was considered.
Following Wednesday's statement, banks including ASB and ANZ said a cut in November had become more likely.
"We were hoping to see some signs that the RBNZ was getting more comfortable about the inflation outlook, and these showed through strongly," Mr Tuffley said.
In the wake of the announcement, the one NZD fell from 0.613 US cents to 0.608.
Mr Tuffley joined the chorus of discontent for the timing of Wednesday's review given updated CPI inflation figures - only issued quarterly - are due next week.
Mr Tuffley said it was "not very helpful" for the RBNZ to consider rates out of sync with CPI data.
Unlike Australia's central bank, the RBNZ meets just seven times a year and will next consider the OCR on August 14.
After holding the OCR at basement lows of 0.25 for 18 months from March 2020, the RBNZ steadily raised rates at every meeting from October 2021 through to May 2023.
It has sat at 5.5 per cent since then, dragging inflation but also economic activity down with it.
NZ has experienced a shallow double-dip recession in the past 18 months, with GDP per capita down each quarter in the past 18 months.
