The Reserve Bank has today lifted the Official Cash Rate by 50 basis points to 5.25 per cent.
The 11th successive hike, it takes the rate to its highest level since December 2008.
The bank says inflation is still too high and persistent, and employment is beyond its maximum sustainable level.
The recent severe weather events in the North Island have led to higher prices for some goods and services, the RBNZ said.
The New Zealand dollar rallied sharply on the higher-than-expected hike. In the minutes following the release, the kiwi was trading at US63.6c, up about half a US cent from US63.08 before the release.
Infometrics Principal Economist, Brad Olsen, joined Simon Barnett and James Daniels to break down the announcement.
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