The last time Bollard moved his official cash rate (OCR) was in July last year when he raised it to 8.25%.
A survey by Bloomberg News last week found 13 of 14 economists now expect Bollard to cut rates this year and 10 of them expect the cut by September 30.
The one hold-out is Westpac and chief economist Brendan O'Donovan doesn't expect a rate cut any earlier than March 2009.
"The statement will be far more hawkish than the market expects," O'Donovan says. He agrees weak data over coming months will bring forward the timing of the first rate cut from June or September 2009, but "we think the market has gotten ahead of itself."
The predominant problem for consumers and businesses at present is high costs and inflation. "In that context, it hardly makes sense for the Reserve Bank to say: 'Here's a bit more inflation, does that help?'" O'Donovan says.
Nick Tuffley, chief economist at ASB Bank agrees inflation considerations will rule out an imminent rate cut but Thursday's monetary policy statement "will place much greater weight on clear signs that the economy has come to a halt, opening the window to OCR cuts later this year."
As well as existing inflation, the Reserve Bank will be wary of the risk the New Zealand dollar falls rapidly, boosting imported inflation, Tuffley says.
He doesn't expect any strong signal of subsequent rate cuts but that the market will have reason to continue pricing in a first rate cut "in the vicinity of October."
However, Macquarie Bank's economists say "extremely poor labour market and retail sales data confirmed that the economy had hit a wall at the start of 2008 that rate cuts were needed sooner rather than later."
