The head of the Reserve Bank (RBNZ) says New Zealand entered its latest lockdown in about the best economic position possible, so interest rates are unlikely to stay where they are for long.
And an independent economist says it's unlikely leaving the official cash rate (OCR) at 0.25 will do more to make the housing affordability crisis worse.
RBNZ Governor Adrian Orr on Wednesday announced the OCR would be staying where it was, after the country was suddenly plunged into the second nationwide level 4 lockdown after a community case of the highly contagious Delta variant of COVID-19 was found.
Before then, it was widely expected the OCR would go up by as much as 50 basis points, which would have been the first hike in seven years.
"We make the decision on the day," said Orr.
"Interest rates need to be higher because inflation pressures are rising and we are at maximum sustainable employment. That is still our view.
"The good news is that we can wait... without doubt the direction for interest rates is upwards."
He said after last year, he and others know a lot more about how to handle the economics of a lockdown.
"We are far better off than we were this time last year in what we know. We know that unemployment is at or thereabouts its maximum sustainable rate.
"Economic growth has been strong, consumer spending has held up and construction activity is full-bore, so we're in a very strong starting position."
Economist Cameron Bagrie told The AM Show while lockdowns cost the economy about $2 billion a week, much of that will be recovered when it lifts - as we found out last year too.
"Forty-eight hours ago the economic outlook was pretty stunning, so the Reserve Bank was in the process of taking away that umbrella in the form of record-low interest rates - well now it's started to rain. The potential is it could be a little bit more of a monsoon."
He doesn't think house prices will balloon much further, despite many economists saying raising the OCR will be the most effective tool to do so.
"Where we sit at the moment is the property market is in a different state. One, the valuations are an awful lot higher. Two, the supply and demand situation no longer looks as precarious as it was 12 or 15 months ago in regard to the shortages.
"Thirdly, the Government has stepped up to the plate and made it less of an attractive investment proposition. Fourthly, the official cash rate is already at 0.25 percent... they could potentially take it into negative territory, but realistically I don't think that is on the cards."
Instead, he thinks it'll slow up regardless.
"The housing market has done incredibly well. Don't expect it to continue indefinitely."