J P Morgan Weekly Prospects says business confidence may have jumped to its highest level since April 1999, but it maintains that the Reserve Bank will delay tightening policy until July.

It says half of the business confidence respondents expect the economy to improve over the next 12 months, although there is a deteriorating medium-term inflation outlook which reaffirms J P Morgan's view that the Reserve Bank will lift the Official Cash Rate (OCR) from 2.5% currently to 4% by year-end.

ANZ Market Focus says trends in credit growth do not suggest a normal cyclical recovery is in prospect, with other question marks continuing to surround the pace of the recovery.

"Weak credit growth, pressure on sovereigns to de-leverage, structural changes and mixed data imply a bumpy ride ahead."

ANZ says it is sticking to its June call for a Reserve Bank OCR hike.

Westpac Weekly Commentary looks at the Reserve Bank's quarterly survey which found that expectations of inflation two years ahead rose to 2.7% in Q1.

"The Reserve Bank regards inflation expectations as a crucial determinant of underlying, medium-term inflation.

"High inflation expectations mean that, as the economy recovers, the OCR will need to do more of the work than if expectations had kept to a more friendly level," it says.

ASB Business Weekly previews next Thursday's rate announcement by the Reserve Bank which it expects to be on hold, as the economic outlook continues to evolve broadly with the Reserve Bank's December forecasts.

"The recovery here remains on track and the RBNZ cannot remain on the sidelines for too long. Importantly, we expect the middle of 2010 rate rises from the RBNZ to come before those of the European Central Bank, Bank of England, Bank of Canada and the Federal Reserve."

BNZ Markets Outlook says while recent economic evidence and international events argue for the Reserve Bank to delay policy tightening, the potential for a strong acceleration in local GDP - as is indicated by the likes of recent business surveys and expectations for the May Budget - suggests the Reserve Bank should probably keep to its stated tightening track, for the meantime.