The wholesale interest rate market has priced in the OCR peaking at 3.94 per cent, matching the Reserve Bank's own forecast peak rate.
The bank noted that food and energy prices had been especially affected by geopolitical tension.
"However, the pace of global economic growth is slowing."
In New Zealand, domestic spending remains supported by high employment levels, resilient household balance sheets in aggregate, continued fiscal support, and a strong terms of trade.
The reduction in Covid-19 health-related restrictions was also enabling increased demand.
"Labour and resource scarcity are also contributing to upward price pressures which are currently exacerbated by seasonal illness, a resurgence in Covid-19 cases, and a net outflow of labour abroad.
"In these circumstances, spending and investment demand continues to outstrip supply capacity, with a broad range of indicators highlighting pervasive inflation pressures."
Employment remained above its maximum sustainable level and the Reserve Bank's core inflation measures were around 4 per cent, it said.
The committee said there was a near-term "upside risk" to consumer price inflation and emerging medium-term downside risks to economic activity.
The New Zealand dollar was barely changed after the 2pm release, trading at US61.27c.
The Reserve Bank, along with most central banks around the world, is tightening monetary conditions in a bid to curtail rising inflation.
As expected
Market watchers were unsurprised by the move.
CoreLogic NZ chief property economist Kelvin Davidson said with inflation still a big problem and employment high, there were no barriers to today's 50 point hike and it was reasonable to assume this move would be followed by another 50 point rise in August, before a couple more 0.25 point increases in October and November.
The question remains, he said, could the OCR keep rising next year?
"The Reserve Bank has certainly indicated a peak of around 4 per cent. But one problem with monetary policy is inflation only responds to OCR changes with a lag, today's move may only impact consumer prices next year.
"And with the risks lingering that the economy could hit the skids sooner than anticipated, an OCR peak of 4 per cent is not guaranteed."
Housing market implications
Davidson said the current monetary policy tightening cycle was sustaining the upwards pressure on mortgage rates and the downwards pressure on property values.
"We've already seen popular one-year special (high equity) fixed rates rise from a range of 2 per cent to 2.5 per cent only a year ago to the 5 per cent to 5.5 per cent mark now.
"In terms of annual mortgage repayments, this equates to an extra $2,050 per year or so for every $100,000 of debt. This will be testing the finances of all borrowers, let alone those new to the market, and may mean the affordability equation doesn't improve much, even as incomes rise and house prices decline."
Earlier today, new data released by Real Estate Institute showed the number of Auckland unsold properties more than doubled in the past year.
The data showed 13,861 homes for sale in June last year. But that soared to 25,271 nationwide last month.
Fewer places are selling - due to factors including rising interest rates and high prices.
What does it mean for mortgage rates?
Bank economists noted the Reserve Bank committee continued with its "fighting talk" on inflation, even as growth is slowing, but the market had antipated and priced in today's move.
"In short, the Bank has got more work to do to ensure it is cooling demand enough to bring inflation back into line with its target," said ASB economist Nathaniel Keall.
"We mostly share this calculus. While slowing growth will be painful, the starting point for the NZ labour market remains extremely tight (indeed, employment is still well above its maximum sustainable level) and the risks to the RBNZ's mandate are asymmetrically skewed.
"It'll be less painful to cut later if the Bank does tighten a bit too quickly now than it would be to have to hike by much more in future and crunch the economy if inflation expectations become well and truly unanchored."
ANZ's Sharon Zollner and David Croy said todays decision was straightforward in that it was consistent with the Reserve Bank's previous published forecast, analyst forecasts and market pricing.
"The market reaction to today's decision was very muted. Having gone into today with about 54bps of hikes priced in, it was only the very short end of the interest rate curve that really needed to recalibrate to the decision, and with no discernible change to the RBNZ's language/tone, it's logical that 1-2year swap rates have not moved far," they said in a research note.
"There was certainly nothing in today's decision to suggest that the RBNZ is about to
blink in the face of downside growth risks the reality is they can't afford to, given where inflation and inflation expectations sit.
"Our OCR forecast remains unchanged: another 50bp hike in August, but then slowing to 25bp hikes as the balance between near-term downside risks and medium term inflation pressures becomes more nuanced than it is currently."
Westpac economist Michael Gordon said the main signal to take from today's statement was the lack of a signal.
"There is no change in the RBNZ's plans to get on top of inflation through assertive action.
The August review itself may be an opportunity to review the situation. For one, the OCR will have reached 3 per cent by that point, much closer to the endpoint that the RBNZ envisages. Secondly, it will have the benefit of a full set of economic forecasts, along with additional time to consider the weakening global backdrop. We still expect further, though more modest, rate hikes beyond that, reaching a peak of 3.50 per cent."
