BNZ economist Tony Alexander explores this in the BNZ Weekly Overview.

He says that firstly, history suggests that the Reserve Bank will wait to see GST go up and how expectations measures are gauged before it will seriously contemplate extra action.

"But it would be surprising if the Reserve Bank did not send a general warning regarding pricing behaviour."

Secondly, Alexander says in an economy still replete with spare productive resources as a result of the recent recession, bargaining strength by most parties will be quite limited.

Thirdly, he says by its nature the rise in GST will take some spending power out of the economy, though this effect will be offset by personal income tax rate cuts and benefit changes.

"Fourth, the change in GST is relatively small and there are so many other uncertain factors swirling around that we don't expect the move to greatly alter the Reserve Bank's tightening cycle."

He believes that the economy is improving in patches and is not what one would call "robust", explaining why the Reserve Bank is under little pressure to start taking away the 2.5% official cash rate (OCR). BNZ is picking an OCR hike in June.

As for borrowers, Alexander still believes floating is the way to go and he wouldn't be thinking about fixing for a number of years - when fixed rates next get back to nice cyclical lows, which is impossible to forecast.

"That is why although people currently may have the best intentions regarding staying floating, once the floating rates are well above fixed rates again somewhere down the track, many will still fix five years higher than they could at the moment simply to save 1% compared with floating."

He says it happened in 1998 and 2008 and will happen again in 20XX.