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The Reserve Bank should lift the official cash rate tomorrow from its current 2.5%, the NZIER shadow board says.
Economists are split on whether Reserve Bank governor Graeme Wheeler should lift rates tomorrow or wait until March.
But the inevitable rise in interest rates will be the first in nearly three years in New Zealand and push the rate above that of Australia which is also on 2.5%.
''It's a knife-edge call but increasing interest rates by 25 basis points [0.25%] has the most support,'' New Zealand Institute of Economic Research senior economist Kirdan Lees said yesterday.
There was some backing for keeping interest rates on hold in January and waiting until March to lift interest rates, he said.
That strategy offered Mr Wheeler the chance to use a full suite of communication tools - including a Monetary Policy Statement, press conference and Finance and Expenditure Committee testimony - to tell the public why interest rates needed to go up.
''The economy is building up steam. Business confidence is soaring, consumers are ready to spend and the Canterbury rebuild will pressure inflation higher over 2014 and beyond.
''Loan-to-value restrictions also need help to slow the pace of house price rises in Auckland. That makes now the time to start removing monetary policy stimulus by raising interest rates,'' Dr Lees said.
However, BNZ senior economist Craig Ebert said he was leaning towards a March hike in the OCR.
The case for hiking tomorrow was ''overwhelming'' but Mr Ebert believed Mr Wheeler would adhere to his December MPS word he would leave any first increase in the cash rate until March or April, at the earliest.
''If we want to split hairs, we could say the bank's previously published 90-day bank bill track did not obviously imply a full 25 basis points of tightening until June. So a hike in January would need a lot of explaining by the bank.''
The housing market was showing tentative signs of slowing in activity, if not prices.
That was no more moderation than the bank probably expected and it was certainly not ''crashing and burning'' as some feared, he said.
The trade-weighted exchange rate was still above Reserve Bank assumptions - especially with the current surge in the New Zealand-Australian dollar cross.
''To the extent the Reserve Bank officials are still unduly concerned about the strong currency, they might worry what a rate hike might do in the present environment, with liquidity still potentially affected by the holiday season.
''We don't believe the net weight of evidence and news has been strong enough to shift the bank's mind all the way into January to get its stimulus removal process under way.''
While there was a good chance the bank was already late to the party, it could at least be consistent with its own framework of assessment at its OCR review tomorrow, Mr Ebert said.
Today, the Reserve Bank's data on high-LVR lending for December would be released.
The proportion for November, excluding exemptions, had shrunk to just 5.8% - the six-month total to March for each registered bank must come in below 10%.
Mr Ebert would not be surprised by another low result for December, especially with the Reserve Bank now exempting lending for new builds.
Also, exemptions through the existing government-sponsored Welcome Home scheme, which recently relaxed its thresholds, looked to be gaining favour.
December's building trends will be released tomorrow. While they were believed to be positive for December, they might struggle in respect to residential consents, following November's apartment spike, he said.
December's migration and tourism numbers were likely to remain ''unequivocally positive''.