Oct. 19 (Bloomberg) -- New Zealand's dollar, the world's best-performing major currency the past three months, extended its gains amid speculation Reserve Bank Governor Alan Bollard will raise interest rates next week.

Six of 11 economists surveyed by Bloomberg News expect a quarter-point rate rise to 7.5 percent on Oct. 26. Four analysts have changed their views the past week after reports showing the housing market is buoyant and inflation may not be abating.

``With risks to the inflation outlook worsening and resource pressures tighter, we expect Bollard to take the quarter-point hike'' the market expects, said Sean Comber, markets economist at ANZ National Bank Ltd. in Wellington. ``Should the Reserve Bank confirm expectations by lifting the cash rate and continuing extremely tough talk, then the New Zealand dollar may extend higher.''

The New Zealand dollar bought 66.34 U.S. cents at 9:30 a.m. in Wellington from 66.23 cents in late Asian trading yesterday. The currency may rise to 67.20 cents over the next week, Comber said.

A report Oct. 16 showed house sales rose to a four-month high in September and it took less time to sell a house than in August. A report on Oct. 10 showed capacity utilization, which measures how much plant, equipment and labor companies are using, surged in the second quarter. That leaves firms with less room to boost production without raising prices.

Bollard, who is required to keep inflation between 1 percent and 3 percent, has kept the benchmark rate at a record 7.25 percent since December.

On Sept. 14, he said he was ``less confident'' the benchmark rate wouldn't have to rise because inflation probably won't fall below 3 percent until the third quarter of 2007. Consumer prices rose 4 percent in the year to June.

The probability of a quarter-point rate increase in the benchmark rate was 62 percent yesterday from 20 percent two weeks earlier, according to an indicator calculated by Credit Suisse First Boston, based on trading in overnight interest-rate swaps.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

Last Updated: October 18, 2006 16:40 EDT