The bank has revised its prediction of a rate hike in May next year after poring over the latest Quarterly Survey of Business Opinion (QSBO) report.
ASB's analysis of the NZIER QSBO report found labour market capacity pressures, a strong lift in wage inflation, and broader inflation increases.
The lender's economists, including Nick Tuffley (pictured) said: "Along with anticipated lifts in demand indicators, capacity pressures squeezed higher and inflation indicators surged. The labour market is exceptionally tight, showing signs the labour market will return to the frothiness of 2005-2006. Difficulty finding labour is at record highs and we expect that wage inflation will soon lift strongly.
"It is very clear that record amounts of monetary stimulus are no longer needed to support the economy. With inflation risks getting too high for comfort, we now expect the RBNZ to start lifting the OCR from November this year."
As inflation fears rise in NZ and overseas, ASB believes the Reserve Bank will raise interest rates.
"Inflation expectations have started to creep higher and will likely continue to lift over the coming year. Against of backdrop of higher inflation expectations, the RBNZ is likely to become increasingly uncomfortable leaving the OCR at emergency settings."