The Reserve Bank of New Zealand (RBNZ) finally got around to raising the official cash rate (OCR) by more than 25 basis points.
It raised 50 basis points from 1.0% to 1.5%.
New Zealand has massive inflation that for some reason (lol - we wonder why!) is not reflected in the official figures.
The habit of the bank has been to run around finding excuses for not lifting the ridiculously low interest rates that have been in vogue since the global financial crisis (GFC).
They have come up with some pretty hilarious excuses at times. One of our favourites is 'looking through' the inflation figures (presumably at what's really going on).
Their reckless quantitative easing (money printing) program added so much fuel to the fire.
Well, now they're between a rock and a hard place.
If they'd run a sensible policy all along the dollar would have been higher (admittedly) but there wouldn't be a housing bubble as big as there is at the moment.
Nor would stocks have reached the highs they did.
Old people wouldn't have been huddled around their fireplaces because they couldn't earn anything on their savings.
The poor wouldn't have been struggling with ever higher prices for the essentials of their lives.
The malinvestment that has occurred for some time totals in the hundreds of billions.
So do they continue aggressive tightening and bankrupt some property owners and businesses or do they wimp out as usual and keep hitting workers and savers?
Not a great place to be for a central bank. There are many other central banks of course in the same position.
The truth for New Zealand however is that a 0.5% raise now is too little, too late.
As for investors stock prices will probably fall. Perhaps not as far as one might think because most believe the RBNZ will not ever really get serious with inflation.