With investors still questioning the US economic recovery, rates there remain low, while all eyes will be on the Reserve Bank of Australia (RBA) for its rate announcement today.

"A surprise rate hike is not completely out of the question, although our expectation is the RBA will be on hold for the rest of this year," the ASB economists say. They expect the Reserve Bank of New Zealand (RBNZ) to hike rates by June next year, a revision on their earlier prediction of July.

Meanwhile, the BNZ Capital Markets Outlook makes note of the expansion in mortgage lending of a seasonally adjusted 0.3% seen in August and in line with July's rise.

"When it's cooking this variable rips along at more than 1.0% per month. The fact it's nowhere near this leaves us unconvinced the housing market is beginning to race away again (beyond its undeniable flurry of late, that is)," it says.

The BNZ Capital economists add that the latest mortgage approvals data also leaves them "tepid".

"The weekly approval numbers are now beginning to fall short of year-ago levels (of late-September 2008, just after the Lehman Brothers collapse."

They go on to state that the current 2.5% Official Cash Rate (OCR) is working more like a 4.5% rate because of the battle for relatively scarce local funds.

"The point is: don't think the 2.5% OCR is all that low and stimulative, when, in effect, it's arguably acting more like a 4.5%," it says.

Also focusing on the OCR, the ANZ/National Bank Market Focus says it still sees the tightening cycle as a H2 2010 story.

"But the market will want to keep testing an early rate hike theme, especially with a strong Quarterly Survey of Business Opinion (QSBO) expected this week," it says.

"Given our view, we see current levels as attractive entry points to instigate long positions at the front end. But we favour being patient and waiting until past the QSBO and RBA."

Meanwhile, the Westpac Weekly Commentary rounded up the range of local data good news stories that have been out recently; including the National Bank of New Zealand business confidence survey, which rose sharply for the sixth straight month and the Westpac employment confidence survey, which rose by 6.9 points to 103 in September.

The caveat - as it points out - is that employment conditions are still tough, although workers are becoming more cheerful about the outlook for next year.