WELLINGTON, Jan 16 (Reuters) - New Zealand's business confidence in the fourth quarter improved significantly but remains slightly pessimistic, a private think tank said on Tuesday.

A net 2% of firms surveyed expected general business conditions to deteriorate compared with 52% pessimism in the previous quarter, the New Zealand Institute of Economic Research's quarterly survey of business opinion showed.

Christina Leung, principal economist at the think tank, said that the institute expects inflation to return to the Reserve Bank of New Zealand’s target of 1% to 3% by the second half of 2024 and to reach 2% in the first half of 2025.

This will be positive news for the central bank, which has battled historically high levels of inflation and late last year indicated the potential for a further rate hike if it felt inflation pressures were not easing.

“It’s a pretty encouraging picture for the Reserve Bank and it reinforces our expectations that there won’t be further increases,” Leung said. She added, however, that they did not expect to see the cash rate cut for the middle of the next year as it makes sense to have a “wait and see approach.”

Leung added that the data also suggested a “reasonably strong” rebound in GDP in the coming quarters and so the central bank was unlikely to be concerned enough to cut rates in the near term. (Reporting by Lucy Craymer; Editing by Lisa Shumaker)