The Reserve Bank will tomorrow announce whether it will cut its official cash rate - a decision that will mean hardly anything to home owners and wage and salary earners struggling to make ends meet.
Even if the central bank cuts its rate - which currently stands at 8.25% - by 0.25%, mortgage rates are predicted to stay the same, or even rise.
The reason is the ongoing global credit crunch, combined with New Zealand's low rate of savings which leaves the country heavily dependant on imported credit.
Reserve Bank figures show about one third of retail bank funding comes from overseas.
Electronic card transactions with New Zealand-based merchants fell a seasonally adjusted 0.6% last month compared with May.
The figures released by Statistics New Zealand show further signs of a squeeze on consumer spending already under the impact of rising fuel prices.
The card transactions series had its slowest annual increase since the series started in October 2002, to be 5.6% higher in June than a year earlier.
Retailers are showing signs of being under pressure, with ongoing sales and special funding deals being constantly advertised.
The Reserve Bank has been looking for a sign that domestic spending has slowed to give it the excuse it needs to start easing monetary policy.
In its June Monetary Policy Statement, the Reserve Bank surprised markets with its willingness to signal a series of rate cuts starting later this year - even with annual inflation forecast to reach 4.7% (which could be the highest rate since 1990) and to average above 3% for the next thee years.
Since then, the economy has deteriorated further.
Inflation is running at 4%, and it is likely to be 5% or more by September.
Food, fuel and energy prices have emptied the wallets of households which are also facing higher mortgage rates.
The New Zealand Manufacturers and Exporters Association yesterday questioned the relevance of the official cash rate.
"With the factors driving inflation beyond the control of the Reserve Bank, and interest rates set to remain high regardless of any decision to cut the OCR, the upcoming OCR announcement has become inconsequential from the standpoint of inflation control," association chief executive John Walley said.
Rising oil and commodity prices were driving inflation above the 1% to 3% target range, and inflation was likely to rise rather than fall in the immediate future.
Retail interest rates looked set to remain high because of the price of international credit.
Those two factors demonstrated the failure of monetary policy, he said.
New Zealand's monetary policy had been hurting the tradeable sector for years, and had failed even in terms of its own narrow targets.
High interest rates in recent years had seen the economic boom wasted on a "feel good" housing bubble rather than the development of the real economy.
"We need to see our political leaders tackle this problem head on," Mr Walley said.
"Broad structural change is needed to make New Zealand internationally competitive and remedy our trade balance.
"This needs to start with a hard look at our monetary policy."
