"Adjustment" suggests the move could be either up or down but there is an implication that up is more likely in the accompanying comment that "inflation is expected to increase as the expansion continues".
Bank of New Zealand head of research Stephen Toplis said: "We think this translates into a very strong commitment not to raise interest rates again unless there are clear signs that inflation is going to go through the [2 per cent] mid-point of the target band. If one takes this literally then the Reserve Bank is either not going to hike again until 2016 or, in fact, at all."
Toplis now thinks it will be December next year before governor Graeme Wheeler raises the OCR again and that the peak will be 4.25 per cent.
Westpac chief economist Dominick Stephens said the Reserve Bank was worried inflation had failed to materialise despite a strong economy.
"In response, the bank has indicated that it will not hike the OCR again until it sees the whites of the eyes of inflation. But a range of factors, from falling oil prices to lower ACC levies, indicate that inflation is going to remain quiescent for quite some time, and therefore the OCR will remain on hold for quite some time."
Stephens expects the next move will be an increase in September next year.
ANZ chief economist Cameron Bagrie expects the Reserve Bank to keep the rate on hold until December next year.
"While the Reserve Bank still has an implicit tightening bias, executing on this looks far off given current uncertainties and ambiguities. In fact with trend growth beckoning one could easily take [yesterday's] statement and economic developments as suggesting the tightening cycle is close to an end," he said. Bagrie expects no OCR rise until December next year.
ASB chief economist Nick Tuffley read yesterday's statement as indicating that the Reserve Bank has become a lot more wary of the risks of inflation being persistently low.
"The Reserve Bank is effectively questioning whether further OCR increases will be needed - the most significant shift in the bank's view within the statement. It has a tightening bias still, but it has been watered down considerably."
Tuffley considers OCR cuts unlikely, particularly if a falling dollar effectively delivers a loosening of monetary conditions. He also notes that fixed-term mortgage rates are lower than they were before the Reserve Bank started lifting the OCR last March.
Money market pricing has not got a full 25 basis points of OCR increase priced in until March 2016 and a second by October 2016. Tuffley is less sanguine, picking the first by September next year and the second six months later.
Deutsche Bank chief economist Darren Gibbs, whose forecasts include a further marked depreciation in the kiwi dollar, struggles to see inflation remaining at current tame levels.
"However, we think that the Reserve Bank is unlikely to feel compelled to tighten policy again until September next year, about the time that we expect the Federal Reserve, the Bank of Canada and the Bank of England to be in the process of lifting rates, providing some 'cover' for the Reserve Bank," he said.
AMP Capital chief economist Bevan Graham said it was clear the Reserve Bank believed it had done enough for now and that "for now" was likely to be a long time.
"As a notorious hawk it pains me to concede that the probability of further rate hikes has diminished recently," he said. "I expect that, like us, the Reserve Bank will most likely still think the next move in interest rates will be up rather than down. But recent low inflation outcomes means they have considerable time on their side."
Graham expects the next OCR hike will be in September next year.
On hold
• Reserve Bank keeps official cash rate steady at 3.5%.
• Language expecting more tightening has been dropped.
• It now says a period of assessment remains appropriate.
