The Reserve Bank has held the official cash rate steady, as expected, and reiterated rate cuts are a long way off.
The benchmark rate was left unchanged at 5.5 percent for a third meeting in a row, after 12 increases between October 2021 and May this year.
The central bank's monetary policy committee (MPC) said inflation was falling as the economy slowed and labour market pressures eased, and previous rises worked through the economy.
But it acknowledged risks that the economy did not slow fast enough and that inflation might get a shot in the arm from recent global price hikes, which justified rates staying high.
"The committee agreed that interest rates may need to remain at a restrictive level for a more sustained period of time, to ensure annual consumer price inflation returns to the 1 to 3 percent target range," the MPC's minutes said.
"Interest rates are constraining economic activity and reducing inflationary pressure as required."
Photo: RNZ
It said the economy's growth outlook was "subdued" despite the stronger than expected rate in the second quarter, but there were risks galore.
"There is a near-term risk that activity and inflation do not slow as much as needed. Over the medium term, a greater slowdown in global economic demand, particularly in China, could weigh more on commodity prices and New Zealand export revenue."
Analysts were unanimous in expecting no change, and the tone of the MPC statement and discussion were similar in content and tone to the August statement, which had included economic forecasts, and a track for the OCR pointing to no rate cuts before late 2024.
Westpac's chief economist Kelly Eckhold believed the statement was softer than he expected, perhaps to cool ideas of a rate riser in November.
"While we continue to see a 25 bp (basis point) rate hike in November at this stage, but this must be a lower probability than previously thought."
The RBNZ would be waiting for updated numbers on inflation and the labour in the next few weeks as well as the world outlook to determine its next step, he said.