As expected, the Reserve Bank raised the official interest rate by 50 basis points to 2.5% on Wednesday afternoon.

This is the fourth time the Official Cash Rate (OCR) has been raised this year, having seen previous rises in February, April and May.

An economist earlier today told Breakfast the latest increase won't have an immediate effect on inflation.

"In the short-term and at an individual household level it can be quite concerning, but I believe it's a short-term trade-off for a long-term sustainable economy," Sense Partners' Hannah Ouellet said.

She explained some banks had already "baked in" any increase into mortgage rates as they were expecting the OCR rise.

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However, Ouellet described the immediate effects as a "little bit different” with increasing interest rates being "really good news" for those with savings or term deposits, but 'bad news" for borrowers and those with shares.

People would notice their KiwiSaver investments and the NZX share portfolios falling, Ouellet said.

In a statement, the Reserve Bank said global inflation has been largely driven by supply disruptions due to Covid-19 and the Russian invasion of Ukraine, combined with an overall increase in spending worldwide.

But while New Zealand has had to tighten its purse strings, through increased interest rates, the domestic economy is in a good position to weather the global financial situation.

"In New Zealand, domestic spending remains supported by high employment levels, resilient household balance sheets in aggregate, continued fiscal support, and strong terms of trade."

However, prices may continue to rise for some time as consumer demand remains high.

"The reduction in Covid-19 health-related restrictions is 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."