Westpac's chief economist says it is time for the Reserve Bank to rethink when it will consider interest rates hikes amid increasing signs the overseas and local economies are improving at a faster pace than expected.
The Reserve Bank is not expected to change the Official Cash Rate of 2.5% when it reviews the cost of borrowing on Thursday.
Westpac's Brendon O'Donovan says the bank's view that interest rates will remain at or below current levels until the latter part of next year is now redundant.
Mr O'Donovan says it would be better to make small, regular rate adjustments at an early stage than to leave it too long and have to make a large rise.
Most economists are not so gung-ho, saying there is plenty of spare capacity, unemployment is continuing to rise and higher funding costs for banks and the stronger New Zealand dollar are acting as a brake on growth.
Markets are already pricing in a quarter of a percentage point increase in January.
