Economists split on whether Reserve Bank will hike cash rate

They say that while the booming housing market requires an interest rate dousing, a rate rise could give the kiwi dollar another lift, further curtailing incomes of exporters and reducing the price of imports.

Eight of 15 analysts surveyed by Bloomberg News say the rate will be unchanged on Thursday. Seven say central bank Governor Alan Bollard may raise the rate a quarter point to 5.25 percent. All but one economist expects the rate will be higher by March amid concern inflation will gather pace as unemployment falls and consumers spend more. The 12 percent rise by the New Zealand dollar against its US counterpart the past three months means Bollard can afford to wait this week, said Ulf Schoefisch, chief economist at Deutsche Bank AG in Auckland.

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