8.25%

As expected by most, Dr Bollard has put the official cash rate up to 8.25%.  I think this was the right decision – a failure to do so would have impacted inflation expectations.  Hopefully this can and will be the last increase.  However I wouldn’t expect any falls until late 2007 or more likely early 2008.

This graph shows the official cash rate since it started.  From 1999 to 2003 a mixture of up and down, but for the last four years it has been a one way direction.