The Reserve Bank gave its tacit approval for the dollar and interest rates to start moving modestly higher with its decision to keep the official cash rate at a low of 2.5%.
The central bank ignored calls from exporters to lower the cash rate to help bring down the value of the dollar.
"The Reserve Bank has resigned itself to the role of a spectator, accepting the current levels of the New Zealand dollar and interest rates,"ASB economist Jane Turner said.
The Reserve Bank declined to mention that financial conditions were "unwarranted".
"Indeed, the bank's economic forecasts contained tighter monetary conditions in June."
A key change in the statement by bank governor Alan Bollard was the walking away from the beefed up easing bias of July, she said.
Not cutting the OCR yesterday signalled that the bank was extremely unlikely to ever cut further.
The next move in the OCR was up and it was a matter of when, not if.
Ms Turner expected the bank to lift its rates by June next year (previously July).
"While the Reserve Bank states they expect to keep the OCR at or below the current level until the latter part of 2010, the market has the possibility of hikes priced in during the first quarter of 2010 and expects the OCR to be tightened by well over 1% by this time next year," she said.
Otago Chamber of Commerce chief executive John Christie said the strength of the dollar was a concern to his exporting members, some of whom were struggling in the current economic environment.
"If the dollar appreciates further, it will make it even harder to do business.
"We need to export our way out of the recession, but now Dr Bollard is drawing attention to better times for retail sales and housing.
Retailers will be pleased to learn that, but our economy will again be driven by our gratuitous nature.
"We are spending our way out of a recession when we should be earning it. We have to grow real wealth."
Households now understood that if they could not afford something, they should not borrow to buy it.
However, it seemed that policy makers had yet to learn that lesson, Mr Christie said.
The Otago Chamber was joining the chorus for the Reserve Bank to have more tools in its arsenal to fight inflation.
The OCR had proven to be a "blunt instrument".
It was driven by the economy and that might not lead to the best outcome.
