Economists say it is unlikely the Reserve Bank will raise the official cash rate this week, but that Wednesday's call will set the tone for what comes next.
Though the major banks disagree on the timing of future hikes, they are united in their view that the rate will likely hold until the central bank has a clearer read on the direction and pace of inflation.
The OCR is currently set at 2.25%, and has its next review on May 27.
Craigs Investment Partners head of private wealth research Mark Lister said more significant than Wednesday's decision would be the accompanying monetary policy statement, where the Reserve Bank will lay out its forecasts for the economy and signal its future intentions.
"That is where they could lay the groundwork for an OCR hike at the next meeting in July," he told BNZ Business Breakfast on Monday morning.
"There's an outside chance they hike the OCR in the eyes of financial markets, about a 20% chance, so not likely."
Lister said financial markets were currently pricing in between 100 and 125 basis points of increases over the coming year — which would take the OCR from its current level into the mid-threes.
Wednesday's decision comes as financial markets price in a small but growing chance of an increase. (Source: BNZ Business Breakfast)
The decision lands in the middle of a big week for the coalition Government, with Finance Minister Nicola Willis to deliver her third Budget on Thursday.
"I don't envy politicians at all, any of the time, but even less so this week," Lister said.
"Imagine having to deliver a Budget against that uncertain backdrop that you're seeing in an election year, with all the pressure that that brings, and when you don't have that strong economy, that increasing tax take to give you the funds to do all the things that you want to do."
Anna Breman spoke to Q+A about oil price uncertainty and whether the bank has the authority to mandate cash access. (Source: Q and A)
Wednesday's MPS will be the first from the central bank to make dissenting votes and opinions public when consensus is not reached over OCR decisions.
Reserve Bank Governor Anna Breman said the agreement to update the committee's charter is part of a wider effort to increase transparency, a goal she had signalled since her appointment was announced in September last year.
She said the new charter will also make it easier for committee members to communicate their individual views and would “bring us in line with some of the most transparent central banks in the world".
The morning's headlines in 90 seconds, including the terrifying moment a paraglider’s hit by a plane in mid air, and Peter Burling scores a win over Team New Zealand. (Source: 1News)
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