Reserve Bank Governor Adrian Orr during a press conference in December. Photo / Mark Mitchell
How strong is this economic recovery really?
The Reserve Bank gives us its verdict on Wednesday when it decides whether it needs to make fresh monetary policy moves - or keep its powder dry for later in the year.
Economists say we shouldn't expect to see rates cut further - yet.
The key decision for Governor Adrian Orr and his monetary policy committee this week will be whether to increase the scale of the bond buying (quantitative easing) programme - currently capped at $60 billion.
That programme has so far managed to keep rates low, taking pressure off local credit markets by guaranteeing a buyer for bonds the Government has issued to fund pandemic support measures.
Economists are broadly in agreement that the programme will need to be expanded, but with the domestic economy tracking better than many had expected, they are divided on whether the RBNZ should move now.
ANZ's economics team is one of those picking we'll see a QE move on Wednesday.
Despite an interest rate sitting at record lows, the Reserve Bank still has a range of policy options open to it, say ANZ economists Liz Kendall and David Croy.
Unfortunately "none of those options are straightforward."
"Weighing up a number of considerations, we expect QE to increase to $90b, and that the length of the programme will be extended to 18 months," they say.
They expect that the Reserve Bank will also keep other options - like cutting rates into negative territory or buying foreign bonds - on the table.
While they doubt these will deployed there was a chance that the RBNZ "conveys more openness to their use than the market currently expects."
At Westpac, chief economist Dominick Stephens is picking that the RBNZ may hold fire for now.
His long-term view isn't far off that of the ANZ team - picking that the QE programme will be extended to $90b over the next 18 months.
He also argues that we'll see the official cash rate - currently at 0.25 per cent - fall to -0.5 per cent by April next year.
But there has been a "swathe of better than expected economic data recently," he says.
That's included consumer spending, employment, housing and commodity prices.
"The surprising strength of the economy is particularly important for the Reserve Bank, given than its economic forecasts were so much more pessimistic than ours in the
first place," he says.
Counter balancing that though was the increasing likelihood that borders would stay closed for longer than anticipated.
Other negatives were the strength of the Kiwi dollar - which will start to be a headwind for exporters.
A third issue was that the strong economic data had meant a slowdown in the government's fiscal response.
"Putting all that together and "given the massive uncertainties inherent in any forecast at present, there really isn't a compelling reason to change the stance of
monetary policy," Stephens said.
ASB economists Mike Jones and Mark Smith also see expanding the QE programme - or printing more money - as the most likely next move for Orr.
They agree that there isn't a compelling reason to lift the cap on QE yet.
They note that the RBNZ is currently about third of the way through its initial $60b cap - having purchased about $22.5b worth of government bonds.
However, they say we could see some tinkering at the margins of the programme - perhaps an increase to $80b as an interim step.
They'll also be looking for an update about the readiness of other unconventional measures, like negative rates.
Ultimately the monetary policy statement is likely to be an opportunity for the RBNZ to "reassure markets that it has a number of other policy options available that it will be prepared to exercise if needed."