ANZ Market Focus says almost all the New Zealand data released this year has been disappointing, bringing with it a change in sentiment and as a result the Reserve Bank looks set to deliver less and later keeping a lid on interest rates.

Domestic data has been much softer than expected with unemployment surging in Q4, retail sales slumping and house prices falling.

"This is leaving a bitter aftertaste and one that's not going away."

The soft data has prompted Westpac to change its tune this week and join the other banks in pricing a June Official Cash Rate (OCR) hike rather than April.

In Westpac Weekly Commentary it also says consumers have been more responsive to the housing market upturn than the Reserve Bank assumed and if this relationship holds, the potential tax changes could indeed do some of the tightening work that the Reserve Bank would have to do otherwise.

ASB Business Weekly also acknowledges that softer data has reduced some of the urgency for the Reserve Bank to unwind stimulus expecting a lift in the OCR in June of 25 basis points.

BNZ Markets Outlook says the market has also continued to push the expected hiking cycle back, with the April meeting now priced at around a 20% chance of a hike, with 25 basis points priced in June.

"There is still around 140 basis points of hiking priced into the curve through to the end of 2010."

J.P.Morgan however, still believes policy will start tightening in April.

"The soft data flow may have bought the Reserve Bank more time on the policy sidelines, but with inflation pressures to become a growing source of concern, there remains a good case for the Reserve Bank to start the next tightening cycle earlier than official guidance currently suggests."