Business confidence remains depressed, according to the New Zealand Institute of Economic Research's latest quarterly survey of business opinion.
The well-regarded survey, published on Tuesday, showed a net 26percent of firms expect the general business situation to deteriorate in the next six months.
That is little changed from the 27 percent figure in the September survey.
On a seasonally adjusted basis, the picture is grimmer, with a net 38 percent expecting deterioration against 30 percent in September.
"Pessimism about the outlook for the general business situationin the next six months is more widespread among firms," institute chief executive Brent Layton said.
He said indications of inflation -- capacity utilization, finding workers, pricing and cost experiences and intentions -- suggested strong inflation pressures remain.
The Reserve Bank would have no grounds to feel comfortable about pricing intentions and inflationary expectations, Layton said.
He said that rather than cutting rates, there was a 30-40 percent chance the Reserve Bank would hike interest rates again this year.
Tuesday's survey had not reduced that probability, he said.
Rates were likely to stay up for longer rather than be cut sooner, he said.
The survey came amid market pessimism about the international economy due to the international credit crisis that threatens to push the United States economy into recession.
The New Zealand's stock market has lost five percent in two weeks, and Monday hit a 14-month low.
Consumer Price data, out on Wednesday, is expected to push the annual inflation rate right to the top, or above, the bank's one to three percent target band.
The institute said survey results "do not suggest there has been any significant reduction in inflationary pressures which the bank will be looking for before it starts to lower the OCR (official cash rate)."
Source: Xinhua
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