The bank is universally expected to leave the official cash rate unchanged at 3.5%. Last week, the Reserve Bank of Australia left its official rate unchanged at 2.5%.
Westpac chief economist Dominick Stephens said the Reserve Bank was likely to deliver three simple messages in Thursday's statement:Inflation is very low but is expected to rise eventually.
The cash rate is firmly on hold for now but is expected to rise eventually.
The exchange rate is too high.
Those basic messages would be reflected in the press release and governor Graeme Wheeler's comments, Mr Stephens said.
''Financial markets will be broadly unsurprised by a Monetary Policy Statement along these lines.
''However, confirmation the OCR is to remain on hold for some time might cause swap rates to drop slightly on the day. And rhetoric targeting the high exchange rate could well prompt a knee-jerk drop in the exchange rate on the day.''
The detail of the Monetary Policy Statement would discuss the outlook for the economy and inflation, including recent developments, he said.
One interesting topic would be the Reserve Bank's take on booming net immigration, falling mortgage rates and the effect on house prices.
The housing market was slow until October, when data registered a resurgence.
''In our view, the October data represents the start of a decent market upturn that had been delayed by September's election. The central bank is unlikely to alter its more sanguine view on the back of a single month's data.''
The Reserve Bank was likely to retain the view of house prices remaining well-behaved but would discuss the risk of prices escalating rapidly, Mr Stephens said.
The main emphasis would be inflation - why it was so low, what the Reserve Bank was forecasting and what the response to ''surprising'' developments might be.
The conclusion would almost certainly be the central bank leaving the OCR unchanged until inflation moved up as opposed to lifting the cash rate in anticipation of rising inflation.
The Reserve Bank had described the high exchange rate as ''unjustified and unsustainable'' at every opportunity since June, he said.
Those were code words for possible currency intervention and records now showed the central bank had intervened in foreign exchange markets by selling New Zealand dollars in August.
Mr Wheeler also used the words again in a speech last week and failing to use them again next week would send the wrong signal, Mr Stephens said.
''The impact of these words on currency markets does seem to diminish with the frequency of their use but we are not yet at the point of zero impact.
''There remains a risk the exchange will fall in the moments after the monetary policy statement is published.''
At a glance
• Official cash rate will remain unchanged
• The exchange rate will be rated as too high
• Inflation will be a focus
• Financial markets will not be surprised
