The Reserve Bank has hiked the official cash rate by 50 basis points to three per cent as it continues to tighten monetary policy to bring down inflation.

The central bank says it remains appropriate to continue to tighten monetary conditions 'at pace” to maintain price stability and contribute to maximum sustainable employment.

Core consumer price inflation remain too high and labour resources remain scarce, it says.

The central bank also tweaked its expectations of the changes it will make to the OCR over the next few years, until September 2025, suggesting interest rates could rise a bit faster than previously predicted.

Its official forecast now sees the OCR peak at 4.1 per cent from the middle of next year, rather than 3.9 per cent.

But since the bank has traditionally only moved the OCR in increments of at least 25 basis points, that will still imply the OCR is likely to top out at four per cent during the current economic cycle.

Its previous monetary policy statement in May had implied the OCR would only reach its peak by the middle of next year and would stay at about four per cent until late the following year, before then starting to slowly drop.

But its new forecast sees the OCR reaching four per cent by March.

The Reserve Bank's forecasts may not necessarily prove accurate; this time last year it was forecasting the OCR would currently be about 1.25 per cent, rather than three per cent, for example.

But they can have an immediate bearing on where banks choose to set their longer-term mortgage and deposit rates.

-Stuff/Tom Pullar-Strecker.