Retiring Reserve Bank governor Alan Bollard received praise yesterday for the way he and the central bank dealt with factors affecting the New Zealand economy.
Dr Bollard kept the official cash rate at 2.5%, as expected, while reiterating the themes from his June monetary policy statement.
"For all it did and didn't say today, we thought the bank's OCR commentary was a very good one," BNZ senior economist Craig Ebert said.
"The risk was that Bollard might sound nervous and edgy again - overexciting the market for yet more easing. We hoped this wouldn't be the case and it wasn't - at all."
Dr Bollard reiterated the basics of the June statement.
Global risks were being carefully monitored and the bank maintained its view of ongoing domestic recovery and progression, supported by the outlook for construction.
"There was a lot more our central bankers could have talked about today but to no real net effect regarding monetary policy. The fact is that there are as many domestic positives as there are global negatives out there. In any case, the interim OCR reviews are not the time to be shooting the breeze."
Such things were best left to the fullness of quarterly MPS statements. The next was on September 13 and would be Dr Bollard's last, Mr Ebert said.
The central bank did not make too much of the high New Zealand dollar, even though the trade-weighted index was a little stronger than in June.
Instead of making valuation judgements, Dr Bollard simply said the exchange rate was "constraining demand growth".
There was a perception that perhaps the bank was becoming more accepting of the view the currency's "fair value" was difficult to be definitive on, especially amid still-high terms of trade, and was flexible enough to adjust to economic reality and risks.
Mr Ebert said the Reserve Bank did not explicitly refer to the recently slow headline June inflation result, which, at 1% annually, hit the bottom of the bank's 1% to 3% band.
Instead, it talked in terms of underlying inflation that was "expected to settle near the mid-point of the target range over the medium term".
"This is a wise approach at a time when some people might be getting excited about inflation going too low. We still forecast higher consumers price inflation than the Reserve Bank does over the next year or two."
The market still had a difficult job to do in positioning for the Reserve Bank's assessment of a limited risk that conditions in the euro area could deteriorate significantly, Mr Ebert said.
Yesterday, rating agency Moody's downgraded the outlook for 17 German banks after a similar move against the German Government's credit rating earlier this week.
Moody's cut the outlook on a swathe of state-backed regional banks, known in Germany as landesbank, but also included IKB Deutsche Industriebank and Deutsche Postbank.
Many of the landesbank have struggled since the 2008 financial crisis and amid Europe's ongoing economic crisis, which has seen growth slow.
Moody's noted that several of the banks held debt that was guaranteed by the German central or regional governments.
It warned more downgrades could come if there was a "further deterioration of the creditworthiness" of Germany's central or regional governments.
"Today's action follows Moody's decision to change the outlooks on the German sovereign and sub-sovereign ratings to negative from stable," Moody's said in a statement.
On Monday, Moody's cut Germany's ratings outlook from "stable" to "negative", citing exposure to European financial woes and the possible cost of more bail-outs.
That was the first step towards stripping Germany of its AAA credit rating, a stark warning that no-one, not even Europe's largest economy, is immune from the euro zone's rolling crisis.
