The Reserve Bank has lifted the Official Cash Rate by 50 basis points to 3 per cent - its highest level since 2015.

The RBNZ now sees the OCR peaking at 4.1 per cent as it fights inflation pressure. Previously it had forecast a peak of 3.95 per cent.

Monetary Policy Committee members agreed that monetary conditions needed to continue to tighten until they are confident there is sufficient restraint on spending to bring inflation back within its 1-3 per cent per annum target range.

The New Zealand dollar rallied to US63.46c from US63.36 before the announcement. Wholesale interest rates remained steady, the two year swap trading at 3.93 per cent.

Global consumer price inflation had continued to rise, albeit with some recent reprieve from lower global oil prices, the Committee said.

"The war in Ukraine continues to underpin high commodity prices, with global production costs and constraints further exacerbated by supply-chain bottlenecks due to the ongoing CCovid-19 health challenge."

Meanwhile, the outlook for global growth continued to weaken, reflecting the ongoing tightening in global monetary conditions.

Domestic spending had remained resilient to global and local headwinds to date.

"Spending levels are supported by a robust employment level, continued fiscal support, an elevated terms of trade, and sound household balance sheets in aggregate," the Committee said.

However, production is being constrained by acute labour shortages, heightened by seasonal and Covid-19-related illnesses. In these circumstances, spending and investment continues to outstrip supply capacity, and wage pressures are heightened. A range of indicators highlight broad-based domestic pricing pressures.

EARLIER:

The Reserve Bank will deliver its next rate move and a new set of economic forecasts at 2pm today.

Another 50-basis-point hike to the Official Cash Rate - taking it to 3 per cent - is considered a near certainty by economists.

"That's been a settled matter for some time," says Westpac chief economist Michael Gordon.

"Even if the Reserve Bank hadn't repeated its wording around tightening monetary conditions 'at pace' in its July review, the need for a continued strong response to inflation has been all too apparent," he said.

Consumer Price Index inflation is sitting at 7.3 per cent - well outside the RBNZ target of 1-3 per cent.

The bigger question was now around what the RBNZ signalled for the path ahead, Gordon said.

Market watchers will be looking for clues about when the RBNZ sees rates peaking and how much damage they'll do to the economy on the way.

A live press conference with RBNZ Governor Adrian Orr will stream here at 3pm.