Wednesday's interest rate hike of 50 basis points has prompted analysts to forecast another aggressive official cash rate (OCR) move from the Reserve Bank before the year's end.
Milford Asset Management portfolio manager Katlyn Parker is picking another rise of 50 basis points in the OCR at next month's monetary policy review - the last for the year.
Parker said the market was expecting the OCR would peak at 4.5 percent next year.
She told AM more work was needed from the Reserve Bank (RBNZ) to bring inflation under control.
"As it stands, in November, it's very much that we're expecting another 0.5 percent increase - so an OCR of 4 percent for Christmas it looks like," Parker told fill-in host Laura Tupou.
"We really need demand to slow and it hasn't slowed as much as expected with all the increase that we have seen to date - there has been a lot, we've been hiking for a year now."
Parker said if people weren't worried about losing their jobs or gaining employment, demand was unlikely to drop significantly.
That's because New Zealand's labour market was heavily constrained, with record-low unemployment and job listings through the roof.
"It's going to be more of a gradual slowdown [in demand] and also - on the flip side - if people are still buying [companies are] going to continue to increase their prices, so it just continues to add to this inflationary circle," Parker said.
'Risks on both sides'
ANZ economists said they also expected another 50 basis point hike next month, with three consecutive 25bp moves to kick off next year. That would take the OCR to 4.75 percent - a slightly higher peak than market predictions.
"We see risks on both sides of this," ANZ said in a note.
"On the one hand, data continue to suggest high core inflation will be difficult to tame and that monetary tightening isn't yet getting the traction it needs to get core inflation down quickly. If [the] capacity (particularly in the labour market) doesn't open up, the OCR could easily have a 5-handle by the end of 2023."
ANZ noted there was still major global economic uncertainty - but the bank accepted inflation would likely be "stickier" than anticipated.
"So on the one hand, we have heightened big-impact, but difficult-to-forecast downside economic risks that may or may not materialise (and may or may not be disinflationary if they do), while on the other hand, the domestic wage-price spiral is looking more developed than previously feared."
ANZ has ruled out the likelihood of near-term OCR cuts, saying they wouldn't be appropriate until it was "crystal clear the economic outlook is disinflationary".
