International financial turmoil has led to the money market largely discounting the possibility of a rise in the official cash rate next month.

After the Reserve Bank's interim cash rate review on July 28, the market fully priced in a rise of 25 basis points to 2.75 per cent on September 15 and a one-in-three chance of 50 points.

But now the odds of any rate hike at the next review is put at just one-in-five, according to Credit Suisse's swaps-based indicator.

The Reserve Bank's statement on July 28 indicated it was inclined to remove the insurance rate cut it made in the immediate aftermath of the February earthquake.


But that was "provided current global financial risks recede and the economy continues to recover".

Deustche Bank chief economist Darren Gibbs said that little more than a week later, developments meant a rate hike was probably off the table for September 15 and perhaps for the rest of the year as well.

Bank of New Zealand economist Craig Ebert suspects Governor Alan Bollard will come back from the annual gathering of central bankers in Jackson Hole, Wyoming, this month in "hardly a positive frame of mind".

"This would make the case for any hike in September, let alone 50, a big ask even though it is probably still justified on domestic inflation grounds, in our view," he said.

The market's first full 25-point OCR hike is now not until March or April next year with a total over the coming 12 months of barely 50 points, down from 100 points at the start of the month.

Goldman Sachs economist Philip Borkin said while the Reserve Bank had indicated it was uncomfortable with the current level of the OCR, this was a dangerous situation to be tightening in.

"If they had a meeting tomorrow they would certainly not remove that emergency cut," he said.