That will give some certainty to financial markets and households with mortgages, but BNZ markets economist Stephen Toplis warned yesterday that people opting for floating rates might need to rethink in coming months.
The New Zealand interest rate curve remained firmly sloped upwards.
The overnight cash rate sat at 3%, the 90-day bank bill rate was 3.19% and then it was a steady climb through to the five-year swap rate at 4.32%.
The swap rate was the rate at which financial institutions lent money to each other.
Mr Toplis said bank lending curves were loosely shaped by the swap curve and so also displayed the upwardly sloped profile.
With the curve sloped upwards, there was a strong rationale for cash-flow-constrained businesses and households to plump for floating rate debt, as considerable near-term savings could be made, he said.
"We caution that there is a significant risk that rates across the curve will move sharply higher over the next 18 months.
Risk-averse individuals would be well advised to consider protecting themselves against this possibility sooner rather than later."
For those less risk averse, it would still pay to consider what might be the catalyst to support fixing at some point over the next 12 months, he said.
There had been a significant move towards floating rates by the household sector.
It was difficult to identify that among corporate New Zealand, although there was some indication of similar behaviour.
The recent shift had been driven by the combination of soft domestic data and the belief that monetary conditions elsewhere in the Western world would remain lower for longer, Mr Toplis said.
That had been mainly driven by the growing view that the United States was to embark on a second round of quantitative easing.
Domestically, the Reserve Bank had supported the local view by indicating that it had no intention of raising the cash rate until around the end of the first quarter of next year.
Moreover, it had intimated that when it eventually started to tighten, it would be a very slow process, culminating in the cash rate reaching only 4.5% by the end of 2012, he said.
Market pricing was even more sanguine about inflation pressure than the Reserve Bank.
The market was looking for rate hikes through the latter part of next year but had rates peaking at a lower 4%, Mr Toplis said.
Westpac chief economist Brendan O'Donovan said the September Monetary Policy Statement made it clear that further interest-rate hikes were off the table for at least the rest of the year.
That was not just because of the weaker economic data, but because the Reserve Bank made some big assumptions about the behaviour of households and businesses that, rightly or wrongly, would not be put to the test in any hurry.
"The continued run of poor economic data since September will only have reinforced the Reserve Bank's stance," he said.
