Opinion: Reserve Bank hawks the talk, time to walk the walk

In line with global movements by central banks, the RB is all but certain to raise its key interest rate when it meets on October 27, in a bid to counter inflation and splash cold water on New Zealanders' debt-fuelled spending spree.

"Global central banks are sending a remarkably unified warning about the threat to core inflation from high energy prices and more have begun to tighten policy," said David Hensley, global economist at JP Morgan in New York told Reuters this week.

After months of hawkish talk from the RB, culminating in a hard-hitting speech by governor Alan Bollard last week, the market has priced in a 25 basis point increase which would bring the official cash rate up to 7%.

Westpac chief economist Brendan O'Donovan said the RB had been talking tough for so long, if it failed to raise rates it would be seen as "the boy who cried wolf".

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