Reserve Bank Governor Graeme Wheeler has signalled he might push back the start of increases in the official cash rate if the New Zealand dollar stays high.
Otherwise the bank's review of the OCR yesterday, which left the rate unchanged at its all-time low of 2.5 per cent, was an almost verbatim repeat of the previous one in September.
The key guidance paragraph continues to say that OCR increases are likely to be required next year but how much and when "will largely depend on the degree to which the momentum in the housing market and construction sector spills over into broader demand and inflation pressures".
What is new is a heightened focus on the other horn of the bank's dilemma, the exchange rate, which as recently as last week was at record highs on a trade-weighted basis.
"Sustained strength in the exchange rate that leads to lower inflationary pressure would provide the bank with greater flexibility as to the timing and magnitude of future increases in the OCR," Wheeler said.
At one level this is a statement of the obvious. The bank's target is headline consumer price inflation and nearly half of the consumers price index consists of tradeable items - goods whose price is influenced by world prices and the exchange rate.
But it is also a reminder to the market that piling into the New Zealand dollar in the confident expectation of higher interest rates also at the margin weakens the case for those higher rates.
Financial markets have priced in a 50:50 chance of a rate hike next March and 90 basis points of increases by the end of next year.
Bank of New Zealand economist Stephen Toplis said the strong dollar would only postpone the Reserve Bank's tightening cycle if it constrained inflation more than the bank already projected.
"We think the balance of risk is very much skewed in this direction."
Westpac chief economist Dominick Stephens said he now expects the Reserve Bank will begin hiking the OCR next April, where his previous call was March.
"We still believe the economy is going from strength to strength. But the exchange rate is now uncomfortably high, and we expect the trade-weighted index will be above 78 next March. At those levels, we doubt that the Reserve Bank will be prompted into hiking the OCR early."
ANZ chief economist Cameron Bagrie still thinks rate hikes will start in March, but will be a stop-start affair.
He sees the fact that Wheeler mentioned the currency-related conditionality as reflecting that the bank is well aware of the currency-related collateral damage from getting too far out in front of the rest of the world in tightening monetary policy.
"But neither can they be slavishly bound to the New Zealand dollar in isolation," he said.
ASB chief economist Nick Tuffley expects the Reserve Bank to start raising the OCR in March but at a gradual pace and to a peak of 4 per cent, 50 basis points less than the central bank's September statement pencilled in over the next two years.
As well as uncertainties about the exchange rate - hostage to events in the United States including the unresolved fiscal issues - the Reserve Bank would want to wait for clarity on the impact of its curbs on high loan-to-value ratio mortgage lending, something which Tuffley said would take months to get a good handle on.
The bank's statement yesterday was non-committal on that.