The financial markets and bank economists seldom see eye to eye, but they are poles apart when it comes to where New Zealand interest rates are headed.
A gulf between what market rates suggest and what economists expect opened up in mid-April when political turmoil flared in debt-laden Greece.
Since then, two camps have formed.
Those in the first camp - as reflected in short-term interest rates - suggest the market is heavily bearish about the world's prospects, to the extent that it has factored in up to two 25 basis point rate cuts from the Reserve Bank of NZ before year end.
In the second camp are economists from the major banks and finance houses who argue that New Zealand economic conditions are firm enough to make rate cuts unnecessary, and that to do so would carry inflation risks.
Economists are regularly polled on their expectations and it is rare to see them on the same page about anything, but on this issue they are resolute: No official cash rate cuts in 2012.
Bank of New Zealand senior economist Craig Ebert said it had turned out to be an "arm wrestle" between the markets and those who analyse them as to where rates go from here.
"Normally you get one or two analysts breaking ranks, or there is a mixed view," he said. "So it is rare for there to be a collective view of no rate cuts at a time when there is a very clear pricing in the market of that very event," he said.
Traders are betting on 44 basis points of NZ official cash rate easing over the coming months, but a recent poll of 15 bank economists conducted by Bloomberg showed not one expected a rate cut this year, with most expecting rate hikes early next year.
While BNZ remains in the rate hike camp, it shifted its forecast this week to a rate rise in March 2013 from an earlier forecast of December 2012.
BNZ expects the official cash rate, which currently sits at 2.5 per cent, to peak at 4.25 per cent in September 2014.
Ebert said Thursday's NBNZ business survey could curb enthusiasm about the local economy, as the threats from the world come to bear, but for it to remain broadly consistent with strong GDP expansion.
"Niggles" facing the economy include a backlash from the commodity correction, the fiscal consolidation inferred in last week's Budget, a slower tone from Australia and China, risks around Europe, along with continued delays in the rebuilding activity in Canterbury.
- APNZBy Jamie Gray Email Jamie