The central bank is expected this morning to keep its OCR at 2.5% and make the customary comments about the delayed Christchurch rebuild and strength of the currency.
However, New Zealand Manufacturers and Exporters Association chief executive John Walley says the Government and the Reserve Bank must back up their words with actions in response to an overvalued exchange rate.
Recently released Reserve Bank minutes showed the central bank was uncomfortable with the level of the New Zealand dollar when it was at US63c.
It is now about US81c-US82c.
It seemed the Reserve Bank and Government had long agreed the exchange rate was well overvalued, Mr Walley said.
"We see other countries manipulating their currencies when this happens. This begs the question, why do we persist in doing nothing? The fear of policy change seems to be the main barrier, but this wait-and-hope attitude comes at a huge cost to the real economy."
A cut in the OCR and a commitment that, when necessary in the future, more emphasis would be placed on prudential controls was required, he said.
For every 1% the currency rose in value, exporters lost about $200 million in export earnings.
That would lead to more debt, lower growth, few jobs and a larger current account deficit, Mr Walley said.
The New Zealand Institute of Economic Research's "Shadow Board" believes interest rates should be kept on hold. Some participants saw room to cut rates but the board placed only a small chance (7%) on raising rates being a good move.
The board participants weight the appropriateness of each interest rate setting to form an aggregate board view ahead of each monetary policy decision.
Across the Tasman, news of unexpectedly low inflation made the case for an interest rate cut irresistible, economists said.
Even so, the series of rapid-fire rate cuts built into financial market pricing is at odds with an outlook which is more underwhelming than apocalyptic.
The Australian Bureau of Statistics (ABS) released the inflation figures on Tuesday.
The rise of 0.1% for the consumer price index (CPI) in the March quarter, following no change in the previous quarter, was below not only the 0.7% forecast from AAP's survey of economists, but also less than anyone surveyed had expected.
The same applied for the two underlying measures favoured by the Reserve Bank of Australia (RBA), which came in at 0.35% on average for the quarter, versus a median forecast of 0.6%.
Annual rates of 1.6% for the headline CPI and a 2.15% average for the underlying average were not just clustered around the bottom of the official 2%-3% inflation target, they made the RBA's recent forecasts seem too high, the economists said.
Last week, New Zealand's inflation also came in well below the Reserve Bank's expectations leading to economists here calling for the OCR to stay at its current 2.5% until March next year.
In announcing the outcome of its board's April 3 monetary policy meeting, the RBA acknowledged the economy had not been as strong as previously expected, but flagged the inflation figures as important to its decision on Tuesday, May 1.
With economic growth and inflation both slower than expected, only a couple of months ago the RBA had been backed into a corner and now is seen as a safe bet to cut the cash rate at the first opportunity.
The RBA's board now looks "highly likely" to cut the cash rate to 4% from the current 4.25%.
But financial markets now expect more than one cut.
The futures market now prices in an aggressive series of RBA rate cuts - cuts of a quarter of a percentage point at each of the next three meetings and another becoming an even-money bet in September and a safer bet by October or November.
That would take the cash rate to 3.25%.
