Reserve Bank lifts OCR

The Reserve Bank has just lifted the Official Cash Rate by 25 basis points to 3.25 per cent.

Economists were expecting another hike in the Official Cash Rate today, but will be closely watching the Reserve Bank's quarterly monetary policy statement for an indication of the timing and extent of potential future moves.

The Official Cash Rate is currently 3.25 per cent, and has now been lifted by 25 basis points in each of the last three adjustments.

The statement is expected to be that the outlook for economic growth and inflation pressures is still one which requires the normalisation of interest rates over time - but the financial markets have priced in more landings and fewer steps in the staircase of rate rises ahead than the bank projected three months ago.

Westpac chief economist Dominick Stephens said earlier this week that wholesale interest rates had fallen to the point where swap market pricing indicated an expectation that the OCR will be 4 per cent by the end of next year.

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