KEY POINTS:
Reserve Bank governor Alan Bollard will probably raise rates again in April, says Goldman Sachs JBWere economist Shamubeel Eaqub.
The bank has "maintained its stern hawkish tone, suggesting further interest rate increases may be required if the upturn in the domestic economy persists", said Eaqub after Alan Bollard lifted the official cash rate by 25 basis points to 7.5 per cent this morning.
Eaqub said the bank's projections for short-term interest rates "imply a 7.75 per cent OCR by mid-year and we expect the RBNZ to raise the OCR on 26 April".
ASB chief economist Nick Tuffley sees a 40 per cent chance of another rate rise next month.
"It's going to very much come down to the signals they're getting from the domestic economy," he said.
"They key thing they're grappling with is: Is this pick up we're seeing in activity just a temporary filup off the back of lower petrol prices or is it something more enduring?
"From an inflation perspective, if it's more enduring they will need to do a bit more work in order to rein it in and keep inflation under control."
The bank is next due to set interest rates in six weeks, which Tuffley said was not a lot of time to see signs of slowing in the economy.
Bollard will be closely examining retail spending data, housing market data and lending data.
"At this stage it looks like on balance [another rate hike] won't happen, but it's going to be a close call."
