This puts the OCR at 1.5 %
The bank explained the move by saying it was appropriate to continue to tighten monetary conditions at pace to best maintain price stability and support maximum sustainable employment.
It said the bank's Monetary Policy Committee viewed a larger move now as providing more policy flexibility ahead in light of a highly uncertain global economic environment.
It cited ongoing supply disruptions in large part driven by COVID-19 and said the Russian invasion of Ukraine significantly added to those problems, causing prices to spike in internationally traded commodities and energy.
However, it said the pace of global economic activity continued to slow.
There was an elevated level of uncertainty internationally but on the positive side there was an underlying economic strength in New Zealand, supported by sound balance sheets, continued fiscal support, and strong export earnings.
Today's decision followed extensive debate among economists as to whether the RBNZ Monetary Policy Committee would go for a 25 basis point jump or a 50 basis point hike.
The problem was that inflation was almost universally believed to have barged its way past the December quarter figure of 5.9% towards a really uncomfortable level of over 7%.
Therefore, aggressive hiking was needed.
On the other hand, too much monetary squeezing could make an already nervous economy feel very uneasy.
That suggested that a lower level of tightening would be selected by the bank's monetary team.
In the end, the RBNZ Monetary Policy Committee opted for a 50 point rise, saying inflation was high, here and abroad, and would pass 7% as bank economists had been predicting.
It said the ‘path of least regret’ would be to increase the OCR by more now, rather than later, to head off rising inflation expectations and minimise any unnecessary volatility in output, interest rates, and the exchange rate in the future.
It concluded by comparing its move to a ‘stitch in time’.
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