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With the world economy improving, New Zealand's commodity prices recovering and the housing market rebounding, there was really little choice but for Reserve Bank governor Alan Bollard to leave the bench mark interest rate on hold at a record low of 2.5%.
The one argument doing the rounds for a cut on Thursday, was that such a move might spook the market and bring about a fall in the New Zealand dollar, which at nearly 70 cents against the greenback is hurting exporters.
However Dr Bollard has made it clear that he doesn't think a cut in the OCR would help in bringing the dollar down.
New Zealand is apparently at the whim of the weak US currency and there is nothing that a small central bank in New Zealand can do about that. He even cited recent failed attempts by other small central banks to bring down their currencies as evidence.
Thursday's statement did however include a commitment to keep interest rates low until mid-2010.
This is seen as vital to ensure that the recovery we are seeing beds in. It also gives borrows some comfort that they can continue to stay on the cheap floating rates for some time yet.
However there is a clear warning for borrowers - when Dr Bollard does eventually start putting up rates some time late next year, it will be fast.
According to the statement, the 90 day bank bill will rise from 2.9% in December 2010 to 4.6% in December 2011.
The 90 day is a pretty good indicator of the OCR track going forward.
Some in the financial markets are tipping it to be even higher by 2011. Westpac is suggesting the OCR will be at 6% by then.
So that would make the floating somewhere around 9%.
As to fixed rates, they are moving on their own accord as they influenced by off-shore factors.
Dr Bollard's statement also includes a warning about the dangers of too much housing driven borrowing and the possibility that a even strong kiwi will wreck our recovery.
He has even called on New Zealanders to start being more mindful of the connection between the housing market and the high dollar, suggesting Kiwis who buy houses shouldn't moan about a high dollar.
I think this was directly at property speculators rather than the average home buyer.
In the end like the dollars, Bollard's hands are pretty tied on housing.
Monetary policy is a blunt tool for cooling a housing boom. It is the government that must now deal with any damage from a housing boom.
By all accounts they are working on the issue...
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