(Reuters) – New Zealand’s central bank dampened expectations of a big interest rate hike when it meets next month, with comments on Tuesday that indicated it may take a more cautious approach.

Christian Hawkesby (RBNZ Assistant Governor) stated that in times of uncertainty when all the risk factors are equal, global central banks tend to adopt a smoothed approach and maintain their current policy rate or adjust it in 25 basis point increments.

After touching a low of $0.7000 three weeks earlier, the New Zealand Dollar traded 0.2% less at $0.7015. One-year swap rates fell to 1.07%, from 1.15%.

RBNZ meets on October 6th to discuss its current monetary policy. In August there was an outbreak of coronavirus Delta. The official cash rate (OCR), which the bank had been considering raising, was not raised.

Sharon Zollner, chief economist at ANZ Bank, stated in a statement that the RBNZ highlighted today that it is important to maintain a cautious policy approach in times of uncertainty …,”.

We never believed that a 50bp increase was likely to start the hiking cycle. This confirms our belief. She stated that the OCR forecast remains unchanged with 25bp increases in October and November. The OCR will then rise steadily to 1.5% by next August.

Hawkesby used the indigenous Maori language throughout his speech to say that the white heron, which is more flexible than traditional “hawk”, signals higher rates and “dove” indicates lower rates.

Hawkesby stated that the bank’s COVID-19 “least regrets” approach required the bank to adapt, moving in small, slow steps and at other times with confidence and speed.

Hawkesby said, “We are well equipped to manage the next period, the labour market is operating at maximum sustained employment, inflation expectations being well-anchored at the target, and the financial markets working well.”