An economist says an improving housing market and credit growth are needed to fuel the economic recovery, and shouldn't yet sound inflation alarm bells.
Reserve Bank governor Alan Bollard told farmers in Ashburton the terms of trade are at the highest level in nearly 40 years, and rising incomes in emerging economies like China should ensure that prices remain at high levels.
Dr Bollard says those high prices aren't yet causing inflation problems, but they could if households and firms use higher incomes to boost spending or borrow more.
Goldman Sachs economist Philip Borkin says that seems unlikely for the time-being as people are paying back debt.
Mr Borkin says until evidence to the contrary emerges, he thinks the Reserve Bank will be happy to keep interest rates low for a little longer.
A Reuters new agency poll found economists expect the first rate hike early next year, although a sizeable minority think the central bank may start raising the cost of borrowing as early as December.
