OCR Hike Sparks Worry for Borrowers and Homebuyers

The Reserve Bank of New Zealand has raised the official cash rate by 25 basis points to 2.75%, its second increase this year.

According to Tony Alexander, an independent economist, there is little sign that the committee feels the need to take interest rates beyond a neutral level.

However, the trouble lies in figuring out what this neutral rate is and how it tends to rise over time as economic growth lengthens.

The Reserve Bank has also signalled that it's mindful of the risk that businesses will seek to rebuild crunched margins once growth conditions are stronger.