It noted that the Russian invasion of Ukraine has significantly added to "supply disruptions, causing prices to spike in internationally traded commodities and energy".
The New Zealand dollar rallied by 60 basis points on the back of the rate hike - to US68.93c
The committee noted that annual consumer price inflation was expected to peak around 7 percent in the first half of 2022.
"The risk of more persistent high inflation expectations has increased," it said.
Reserve Bank Governor Adrian Orr has a policy of following "the path of least regret."
The committee said it saw the 'path of least regret' was "to increase the OCR by more now, rather than later, to head off rising inflation expectations and minimise any unnecessary volatility in output, interest rates, and the exchange rate in the future".
ANZ chief economist Sharon Zollner called the 50 basis point hike in her forecast last week.
"The RBNZ has a big job to do to rein in runaway inflation, and the sooner they rip into it, the lower the economic cost is likely to be," Zollner said.
Kelvin Davidson, chief property economist at CoreLogic NZ, said the Reserve Bank opted for the "shock factor" of a 50 basis points increase and said short-term fixed mortgage rates could travel above 6 per cent as a result.
"For the housing market, the implications are clear – even though mortgage rates have already been rising again in recent weeks, this process isn't over yet. Many 'special' fixed-rate mortgages in the popular 1-2 year terms are currently in the range of 4-5 per cent, and it seems fair to suggest that this could end up in the range of 5-6 per cent over the coming months, perhaps a bit above."
Davidson said that although many borrowers are still sitting on their lower rates agreed last year or earlier, about 50 per cent of existing loans in New Zealand are up for renewal over the next 12 months, with a sharp repayment rise looming.
"At least in terms of credit availability, however, the past few months may be looked back upon as the low-point. After all, some banks are reportedly making a bit more low-deposit finance available, while the relaxed CCCFA rule changes are set to commence soon."
"Given the risk of higher interest rates feeding back into a slower economy, we still wonder if the ultimate peak for the OCR will be lower than the above 3 per cent figure that the RBNZ currently envisages.
"But either way, there are more mortgage rate increases to come, which will reinforce the housing market slowdown that has now so clearly arrived. Of course, with unemployment low and ability to repay having been tested at higher interest rates anyway, we think conditions are still in place for a 'soft landing' rather than serious downturn."
