New Zealand's dollar is tipped to hit parity with the Australian dollar within six months, as its central bank become the first in the developed world to exit record-low borrowing costs.

The New Zealand Reserve Bank has lifted its official cash rate by 25 basis points to 2.75 per cent, with its economy surging from rising dairy prices, the rebuild of Christchurch, which was severely damaged by a series of earthquakes in 2011, and rocketing house prices in its biggest city Auckland.

The morning after: It's not all good news for New Zealand if its currency reaches parity with the Australian dollar. Credit:Reuters

HSBC is predicting New Zealand's Reserve Bank to continue to increase interest rates, predicting a full 100 basis point increase this year, as it moves to contain inflation.

HSBC chief economist Paul Bloxham said by the second half of this year, the NZ interest rate hikes should push the Kiwi dollar to parity with the Aussie.