And across the Tasman this morning, the Reserve Bank of NZ kept its key interest rate steady on 2.5%, but left a big hint that a rise is very close.
After a surprise rise in inflation in the last quarter of 2014, many analysts had tipped a possible rate rise this month, but most had concluded that the best month would be at the March meeting of the bank.
That now seems to be the case, judging by the post meeting statement issued this morning.
"New Zealand’s economic expansion has considerable momentum," the statement started. "Prices for New Zealand’s export commodities remain very high, especially for dairy products. Consumer and business confidence are strong and the rapid rise in net inward migration over the past year has added to consumption and housing demand."
"Construction activity is being lifted by the Canterbury rebuild and by work in Auckland to address the housing shortage. Continued fiscal consolidation will partly offset the strength in demand. GDP grew by 3.5 percent in the year to September, and growth is expected to continue around this rate over the coming year.
"While agricultural export prices are expected to come off their peak levels, overall export demand should benefit from improving growth in the global economy. However, improvements in the major economies have required exceptional monetary accommodation and there remains uncertainty about the timing of withdrawal of this stimulus and its effects, especially on emerging market economies.
"Annual CPI inflation was 1.6 percent in 2013, and forward-looking measures of firms’ pricing intentions have been rising. Construction costs are increasing and risk feeding through to broader costs in the economy.
"At the same time, there appears to have been some moderation in the housing market in recent months. The high exchange rate continues to dampen inflation in the traded goods sector, but the Bank does not believe the current level of the exchange rate is sustainable in the long run.
"While headline inflation has been moderate, inflationary pressures are expected to increase over the next two years. In this environment, there is a need to return interest rates to more-normal levels. The Bank expects to start this adjustment soon," the RBNZ said.
That last statement saw the market start pricing in a 0.25% rise in rates in March. That means Australian companies operating across the Tasman face increased interest costs in coming months.
Watch for the Aussie dollar to fall closer to parity with its Kiwi counterpart if and when the rate rise happens.
