Despite widespread consensus the OCR will remain on hold, ASB suggests that rising term rates and the NZ dollar pose a threat to the "fragile" recovery, which it says is barely getting started.
"Cutting the OCR, in a very benign inflation environment, will help reduce the risk of the recovery being choked off."
It lists the asymmetry of the market; the fragility of the recovery; and the unwanted tightening in monetary conditions since July as reasonable basis for an OCR cut.
"A bold and unexpected move will send a very clear statement to the market about the RBNZ's resolve to keep the OCR low for an extended period. It would also clearly differentiate the economic outlook and monetary policy in New Zealand and Australia," it says.
The ANZ/National Bank Market Focus continues to favour floating rates and states it expects the RBNZ will keep rates low for some time yet.
"We would not be surprised to see them refer to regulatory measures to strengthen this message," it adds.
While the high New Zealand dollar is a significant concern for the RBNZ, Westpac's Weekly Commentary suggests that the pace of the global recovery - and NZ's place in that - should assuage many of the RBNZ's fears.
"We expect no further rate cuts in this cycle, but the market could well be surprised at how long the RBNZ are willing to hold off on hikes," it says.
Borrowers should consider fixing now, according to Westpac. It says short term fixed rates offer the best value available and will do so for some time. However, once homeowners start to move into them en masse, the current levels are likely to increase.
"Borrowers should seriously consider fixing now, bearing in mind that they can reduce uncertainty about future cash flows by choosing a lower interest rate today and repaying more than the minimum amount," it says.
The BNZ Capital Markets Outlook also predicts the OCR will remain at 2.5%.
"A further cut, though not to be ruled out completely (we ascribe about 20% chance of such), would be to ignore the influx of good news since the previous OCR decision back at the end of July," it says.
