Europe Economy

Which central bank will be next to hike rates?

After RBNZ, who will raise rates next?

New Zealand's central bank has raised borrowing costs to 2.75 percent, making it the first developed world central bank to hike rates since the credit crisis began in 2007.

However, Thursday's move by the Reserve Bank of New Zealand is unlikely to trigger a race to raise rates elsewhere -- many western countries are still struggling with the after-effects of the global recession and credit crisis.

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The ending of low interest rates would mark a turning point in the developed world's recovery from the global credit crisis – and ordinary people may not believe in the recovery until their savings rates start to rise once more.

However this is unlikely to happen any time soon. "The crisis countries, including the U.S., Europe and U.K., aren't going to be in any position to raise rates any time soon," Peter Schaffrik, head of UK and European rates and economics research at Royal Bank of Canada, told CNBC.

(Read more: Europe needs a credible deflation strategy)

One of the main reasons for the reluctance to raise is the fear of deflation, where prices shrink in real terms. While prices falling may initially seem like a good thing for consumers, this can also lead to jobs being lost and lower profits for businesses. And while central banks can deal with inflation by raising interest rates, it is more difficult to tackle deflation when interest rates are already at historic lows, as they are in the U.S., U.K., Japan and the euro zone.

As Olivier Blanchard, the International Monetary Fund's chief economist, said in an interview with German newspaper Handelsblatt this week, "The risk of deflation, especially in the euro zone, definitely exists."

(Read more: Central banks repeating Greenspan's mistake)

If you look at European figures as measured by the Eurostat HICP index "at constant taxes," the vast majority of EU countries have seen a fall in real prices in the past seven months. This puts the ECB out of the rate-rising picture in the short term.

Meanwhile, the U.S. Federal Reserve will have to unwind its massive asset purchasing program before hiking rates again, most analysts believe.

So that rules out the developed world's two most powerful central banks.

But the Bank of England, one of the Scandinavian central banks or the Bank of Canada, look most likely to hike rates soon.

(Read more: Can central banks in Emerging Europe fight the Fed?)

The U.K.'s central bank is forecast to start raising rates around this time in 2015, and they could go up to 3 percent by 2017, according to Mark Carney, Governor of the Bank.

Yet the Bank may not in fact be able to raise rates until late 2015, Schaffrik warned.

Bank of Canada will be next to raise rates, with a 0.25 basis point rise in the third quarter of 2014, Kiran Ganesh, cross asset strategist at UBS Wealth Management, told CNBC. Better than expected economic data would drive the rise, he argued.

Norway, which is one of the few developed countries not struggling with deflation after the fall in value of its currency last year, is another name which has been mentioned, along with the Swedish Riksbank.

(Read more: New Zealand central bank raises rates)

"Norges Bank is in no hurry to hike rates," Arne Lohmann Rasmussen, chief analyst and head of rates, FX & commodities strategy at Danske Bank, told CNBC, pointing to the dovish tone adopted at recent central bank meetings. He said he was "puzzled" that the market thinks Sweden might raise rates, because of the country's low inflation pressure.

The Danish central bank, which is currently running a negative deposit rate, might have to make a small rise of around 10 basis points, because of selling pressure around its currency, he argued.

- By CNBC's Catherine Boyle. Twitter: @cboylecnbc.