It notes that monetary policy in all the major economies is expected to remain supportive for longer, although that comment would have been written before the Federal Reserve's statement overnight which has been read as bullish.
It suggests that to the extent the Reserve Bank expects, or hopes, any further tightening will coincide with a broader international trend in that direction, it will be later than it might have thought six weeks ago.
The statement repeats September's loaded language on the currency. It remains "unjustified and unsustainable" and the bank continues to expect further significant depreciation.
It acknowledges that lower commodity prices and volatility in global financial markets have "taken some pressure off" the kiwi dollar, where six weeks ago it said that the exchange rate had yet to adjust to lower commodity prices. But evidently it has not fallen enough, in the bank's view.
Governor Graeme Wheeler sounds happier about the housing market saying house price inflation has fallen "significantly" since late last year due in part to higher interest rates and the loan-to-value ratio restrictions he introduced a year ago. Previously he had just noted that house price inflation "continues to ease".
And the statement has dropped language about the impact of strong net immigration on demand in general and the housing market in particular. That suggests it might be coming to the view that that the make=up of what is currently a record net inflow of migrants might be putting less pressure on the market than the headcount alone would have suggested.
Read the full text of the Reserve Bank statement here:
"The global economy is growing at a moderate rate although recent data suggests some softening in the major economies, apart from the United States. Monetary policy is expected to remain supportive for longer in all the major economies.
Growth in the New Zealand economy has been faster than trend over 2014, reducing unemployment and adding to demands on productive capacity. Strong construction sector activity, high net immigration, and interest rates, which remain low by historic standards, continue to support the expansion. Output growth is expected to moderate over coming years, towards a more sustainable rate.
Lower commodity prices and increased global financial market volatility have taken some pressure off the New Zealand dollar. However, its current level remains unjustified and unsustainable and continues to constrain growth in the tradables sector. We expect a further significant depreciation.
CPI inflation remains modest, and was 1 per cent in the year to September. Contributing factors are subdued wage inflation, well-anchored inflation expectations, weak global inflation, falls in oil prices, and the high New Zealand dollar. House price inflation has fallen significantly since late-2013, in part due to interest rate increases and the LVR restrictions.
The economy appears to be adjusting to the policy measures undertaken by the Bank over the past year. CPI inflation is currently at a low level despite above-trend growth. However, inflation is expected to increase as the expansion continues. A period of assessment remains appropriate before considering further policy adjustment."
Read also:
• Fed keeps rate at record low, ends bond buying
• Inflation comes in flat - OCR tipped to stay low
• Interest rate rise this week virtually ruled out
• LVR policy worth 50 basis points of OCR rate tightening - Wheeler
• Biz confidence shows first gain in eight months in post-election bounce
• Bursting the inflation bubble
See a Statistics NZ chart showing NZ inflation rates over the past decade:
