New Zealand's employment was better than expected in the fourth quarter, as a decline in participation dragged the unemployment rate to 5.3 percent as compared to previous 6.0 percent. The labour cost index was firm at 1.6 percent y/y.

RBNZ Governor recently noted that the central bank will try to avoid mechanistic response to low inflation and to cut rates amid deteriorating oil prices would be inappropriate, adding that the economy still faces higher downside risk.

"With headline inflation remaining very low, we expect wage-setting behaviour to be consistent with results such as today's LCI for the next few quarters." Says RBC Capital Markets in a research note  "We continue to look for 50bps of easing this year, starting with 25bps in March."