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It may be four rate hikes in a row for New Zealand

New Zealand's central bank delivered its third consecutive rate hike on Thursday, and it's likely to make that four in a row judging by hawkish comments, some analysts say.

The Reserve Bank of New Zealand (RBNZ) lifted its key interest rate by 25 basis points to 3.25 percent. While that move was not a surprise, analysts had expected the central bank to suggest a slowdown in the pace of monetary tightening.

Read MoreNew Zealand central bank raises rates

Instead policy makers said further rate increases would be needed to curb inflation in a robust economy.

"Effectively, the RBNZ is a lot more focused on domestic mortgage rates. There's been a lot of competition in the domestic mortgage market in New Zealand which has been pushing rates down," said Robert Rennie, the global head of foreign exchange strategy at Westpac Bank in Sydney.

"The RBNZ is unhappy with that and there is a risk that we see another rate hike in July, which would make it four in a row," he added.


angeloNZ | istock/360 | Getty Images

New Zealand is the only developed economy in the world raising interest rates in the current economic cycle.

Last week, the European Central Bank cut its key interest rate to a record low of 0.15 percent; the Bank of Japan continues to pump money into the economy in a fight against deflation. The U.S. Federal Reserve meanwhile is unwinding its asset-purchasing program but continues to keep its key rate at zero percent.

Read MoreMost economists say the Fed is wrong about growth

"Some of these economies in Asia are doing better so it makes sense for them to be raising rates," Nariman Behravesh, chief economist at IHS, told CNBC.

Consumer prices in New Zealand rose an annual 1.5 percent in the first in the year to March 31, down from 1.6 percent in the fourth quarter of 2013.

Recent economic data from New Zealand reflects strong growth in retails and a rise in building consents but a slowing in house price rises.

Stronger Kiwi

"We see a total of 125 basis points worth of hikes this year and a high at 5.25 percent in 2016," said Rennie, referring to New Zealand's benchmark interest rate.

Currency analysts said they expected further gains for the New Zealand dollar, also known as the Kiwi, given the outlook for a tighter monetary policy.

The Kiwi dollar rose to $0.8642, its highest level in over three weeks, following Thursday's rate hike.

Read MoreThe Aussie at parity by year-end?

"Investors are piling back into the long New Zealand dollar trade because not only did the RBNZ tighten, but they said rates will need to return to a more neutral level, which reflects their commitment to additional tightening," Kathy Lien, a managing director at BK Asset Management in New York, said in a note.

"A move to 87 cents for the New Zealand dollar/ U.S. dollar is likely but stronger gains should be seen versus the euro, Japanese yen, Canadian and Australia dollars," she said.

Westpac's Rennie added: "The idea that the Kiwi outperforms at least in the short term is certainly one of our core calls."

Contact World Economy

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