The official cash rate announcement by the Reserve Bank on Thursday is almost irrelevant given inflation is likely to remain below 1% for the rest of the year.
The announcement late last week of the European Central Bank launching a government bond-buying programme which will pump hundreds of billions in new money into a sagging euro zone economy has attracted most of the market's interest.
The prospect of OCR rate increases have become so distant that debating the exact timing is a distraction.
The main point economists agree on is the OCR is not expected to move from its 3.5% rate for a while. The only remaining discussion is whether the Reserve Bank will cut the OCR this year, as the Reserve Bank of Australia is forecast to do, perhaps this year.
Westpac chief economist Dominick Stephens said the falling price of oil early last month prompted Westpac to reduce its inflation forecast of rate increases this year and to increase its house price and economic growth (gross domestic product - GDP) forecasts.
Last week's consumer price index showed the underlying trend in inflation remained subdued with rising construction costs the isolated exception.
The recent rise in the New Zealand dollar against the euro and the Australian currency would further suppress inflation over the year ahead, he said.
''Such a benign inflation outlook has scotched any idea of the Reserve Bank hiking the OCR in the near term.
''We now expect no OCR hike until June 2016 by which time we expect inflation to have risen back above 2%. We are now forecasting a peak OCR of just 4.5%.''
Mr Stephens did not expect the Reserve Bank would cut rates, or even entertain the idea, under current conditions.
New Zealand was experiencing above-trend GDP growth, an unprecedented net migration boom and a construction boom. Also, the past three months of housing market data had been the strongest in a decade.
The odds of an OCR cut might be low but they were not zero, he said. There was a plausible set of circumstances under which the central bank could cut rates this year.
That could involve some combination of financial turmoil offshore, falling commodity prices, local drought or a global exchange rate war causing the New Zealand dollar to rise.
The Reserve Bank was likely to argue cutting the OCR now would be a mistake because it would fuel the housing market, he said.
The review would need to communicate both the no hike and no cut sentiments, all while leaving options open to deal with the inherent uncertainty of the current environment, Mr Stephens said.
