HSBC is not expecting an interest rates cut.

Speculation is high that the Reserve Bank may be forced to do just that with inflation almost zero.

The bank says just because inflation is low does not mean that the Reserve Bank will be contemplating rate cuts.

It's expecting the next rate move will be up.

Chief Economist Paul Bloxham says it's the medium-term inflation outlook that really matters.

He says assuming the drop in oil prices is a one-off shock, the medium-term outlook has not changed dramatically.