Mohi-uddin at UBS said that the Australian dollar is likely to "trade heavily" against the NZD into the RBNZ meeting, with the pair possibly testing its 2005 low of 1.0430.
However, those calling for a rate hike are in a minority and the consensus view points to an increase only in March. Expectations are evenly balanced with interest rate swaps implying a 48 percent probability of a rate hike.
A Reuters poll of 17 forecasters found only three banks - ANZ, HSBC and Citibank - ready to predict an increase this week.
A 25 basis point cut in the OCR as early as this Thursday is "bold, to say the least," said Ilya Spivak, Currency Strategist at FXCM Live. Meanwhile, Rob Rennie, Westpac's global head of FX strategy in Sydney said the RBNZ will only start an "aggressive" tightening cycle hike in March.
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The benchmark official cash rate has been at an all-time low of 2.5 percent for nearly five years. The RBNZ moved to raise rates to 3 percent the second half of 2010 but reversed that move after the February 2011 earthquake. The New Zealand dollar bought 82.33 U.S. cents at around 9.42 a.m. Singapore time.
— By CNBC's Sri Jegarajah. Follow him on Twitter @cnbcSri