Economists expect the Reserve Bank to raise interest rates again on Thursday, bringing the Official Cash Rate to 3 percent, but are less sure whether the next increase will be in June or July.
ASB chief economist Nick Tuffley said falling global dairy prices and a persistently high New Zealand dollar could affect what the central bank does next.
He said factors influencing the decision could include dairy prices falling noticeably in the first few months of the year and the exchange rate remaining stubbornly high.
The central bank raised the OCR by 25 basis points to 2.75 percent on 13 March - the first increase in three years. Mr Tuffley predicts the rate will move to 4.5 percent by late next year.
"We do think that interest rates are going to bite quite quickly. So many people are on either floating rate mortgages or a fixed rate mortgage that will have to be reset soon, and we have become a lot more cautious with our attitudes towards borrowing as well."
Mr Tuffley said rising interest are likely to change people's behaviour, meaning they won't need to climb too dramatically.
AMP New Zealand chief economist Bevan Graham also expects the Reserve Bank to raise the rate on Thursday, despite the high dollar.
Mr Graham said the central bank will tighten the rate again this week and again in June, September and December to a likely rate of 3.75 by the end of this year. An OCR of 5 percent next year was possible but would require a drop in the exchange rate, he said.
The head of fixed income at AMP Capital Investors, Grant Hassell, said increasing OCR rates do not mean term deposit rates will start rising in equal measure.
Mr Hassell says the bank bill rate is still half a percent below the six month term deposit rate, and until that gap closes further, savers will not see much change.
