The Reserve Bank is expected to hold fire from cutting interest rates next week until it can get a better steer on the inflation outlook, leaving November open for a reduction.

Governor Graeme Wheeler will keep the official cash rate at 2 per cent when he reviews monetary policy on September 22, according to a Reuters poll of economists.

Wheeler has indicated he has at least another rate cut up his sleeve when lowering the OCR in August, and that how the economic data played out would determine whether more or less stimulus was required.

The RBNZ wants to avoid subdued inflation expectations bedding in, a task made difficult by a strong kiwi dollar making imports cheaper, but a rampant housing market meaning lowering rates too much could destabilise the financial system.

Government data on Thursday showed New Zealand's economy grew 3.6 per cent in the June quarter from a year earlier, with building activity driving those gains.

That sector is the country's only one showing signs of real capacity constraints leading to wage inflation, and record inflows of new migrants are seen as stifling pay increases which in turn have helped limit inflation for consumer goods.

HSBC economists raised their growth expectations for New Zealand, and if that can generate a modest lift in inflation, they say the Reserve Bank may not need to cut interest rates any further.

Source:  NZHerald