The Reserve Bank (RBNZ) has raised the official cash rate by another 50 basis points as it battles to keep a lid on spiralling inflation.
It now sits at 3 percent - a level not seen since July 2015. It was appropriate to continue tightening monetary conditions to maintain price stability and aid maximum sustainable employment, the RBNZ said.
Most economists had expected the RBNZ's policy committee to lift the official cash rate (OCR) by 50bp.
"Core consumer price inflation remains too high and labour resources remain scarce," the RBNZ said in a statement.
It added global inflation was continuing to rise despite some relief from lower oil prices.
The RBNZ has moved aggressively to curb local inflation, which was 7.3 percent in the second quarter of this year. The OCR is now more than 10 times what it was in October.
That 7.3 percent inflation figure exceeded the RBNZ's peak forecast of 7 percent and was well above its target of between 1 and 3 percent.
In addition, the RBNZ now forecasts the OCR to peak at 4.1 percent - up from its earlier 3.95 percent forecast.
"The committee expects some easing of the rate of inflation in the near term due to falling petrol prices and stabilisation in international shipping costs," the RBNZ said. "However, inflation pressures have broadened and measures of core inflation have increased.
"Nevertheless, inflation is expected to return to the committee's 1-3 percent target range by the middle of 2024 but this will require a better balance between supply and demand."
