The Reserve Bank is set to make it three in a row this Wednesday – a  half a percentage point increase in the official cash rate (OCR) in a  replay of its May decision.

he 50 basis point rise will take the OCR to 2.5 percent, and will be accompanied by only a brief statement of explanation.

Kiwibank chief economist Jarrod Kerr said it was the Reserve Bank’s way  of trying to restrain economic growth and get inflation back down to 2  percent.

The main development since the last statement in May has been the slump in business and consumer confidence, he said.

“That points to interest rate rises to date and the expectation of more  to come are really having an influence on businesses and households.”

A 50 basis point rise would be the third in a row, the sixth rate rise  since October last year, and the steepest and quickest climb in the  OCR’s 23-year history.

Kerr discounted a 75 basis point rise, as some of the more excitable  commentators toyed with for a while, but he expected the OCR to reach  3.5 percent by end of the year.

ASB economist Nathan Keall said the RBNZ would have to acknowledge that  the economic negatives have continued to mount, but also their  determination to win the inflation fight.

They have to emphasise that doing ‘too little, too late’ in terms of tightening is still a bigger risk than ‘too much, too soon.

Trotting out the word ‘resolute’ in relation to the Bank’s commitment to  price stability will be another signal that getting inflation back on  track is still priority number one.”

The RBNZ’s last forecasts pointed to the OCR at 3.5 percent at the end  of the year, implying another 50 basis point rise in August followed by  two 25 basis points hikes in October and November.

Keall said he expected next year’s rises would not be needed – although  the RBNZ would not admit that – because the economy would likely have  slowed enough and inflation would be showing sufficient signs of heading  back under control.

But the question increasingly asked was what economic price will be paid  for the RBNZ’s battle for inflation fighting credibility and success,  with talk of the risk of recession or a “hard landing” bandied around  more frequently.

Westpac acting chief economist Michael Gordon said: “If the RBNZ did  become concerned about the risk of recession, it has a very powerful  tool at its disposal: it could stop.