OCR up to 8.25%

“This is very good news for New Zealand. Given this positive situation, some of the negative commentary circulating about the economy is unwarranted.

“However, the continued tight labour market, high capacity use, and rising oil and food prices all point to sustained inflationary pressures. That is why we are increasing the OCR today.

“The New Zealand dollar has reached very high levels recently, driven by US dollar weakness and New Zealanders’ heavy demand for borrowing. This level of the currency has been hurting exports.

“The high New Zealand dollar is not sustainable medium term and investors should understand this. The higher OCR now gives strong incentives to New Zealanders to save.