Westpac chief economist Dominick Stephens said the Reserve Bank was likely to reiterate and formalise the main message from the July official cash review, which left the OCR at 2.5%, the same as in Australia.
''To be sure, the central bank is likely to repeat the bullish tone on the economy that appeared in July and will probably make mention of higher dairy incomes. A warning shot may even be fired at inflation expectations.
''But such hawkish commentary will be tempered by the elephant in the room - the MPS will mention the outlook for house prices has weakened on two fronts.''
First, the Reserve Bank recently restricted bank lending to low-equity borrowers.
Second, fixed mortgage rates had risen sharply in recent weeks. Either or both of those developments had the potential to slow house-price inflation but Mr Stephens said it was too soon to discern the magnitude of any impact.
''We believe the Reserve Bank's best response to these developments will be to wait and see what happens before committing to a change in monetary policy.''
The MPS would be designed to do little to alter current financial market pricing.
Financial markets might be pricing in a more aggressive series of OCR hikes than the Reserve Bank deemed necessary, but the central bank would probably see the recent rises in fixed mortgage rates as expedient in its desire to cool the housing market without pushing the exchange rate higher.
''Again, there is no need to make waves at this time,'' Mr Stephens said.
ASB chief economist Nick Tuffley said that in the July OCR statement, the Reserve Bank explicitly linked housing market and construction-related inflation to the monetary policy outlook.
The central bank also inserted a reminder about removing monetary stimulus in the future and expecting to keep the OCR unchanged through the rest of this year.
The dollar was referred to as ''high'' rather than ''overvalued''.
''Collectively, these comments prompted swap rates and the dollar to rise within an hour of the release. We don't think the Reserve Bank intended such a result. Rightly or wrongly, markets pore over the words the Reserve Bank uses and can react to even subtle changes in language.''
Reserve Bank governor Graeme Wheeler was expected to be more careful in language choice this week for the closely scrutinised policy assessment in the MPS, to avoid triggering any unwitting lifts in interest rates or the New Zealand dollar, Mr Tuffley said.
