The economy can absorb more official cash rate rises after the Reserve Bank’s 25 basis point lift, Bagrie Economics lead economist Cameron Bagrie says.

He says with inflation at 4.1% and core measures sitting about 3 to 3.5%, outside the 1 to 3% target band, the OCR definitely needed to go up.

He says the South Island is in better shape than most realise, driven by an export-led recovery rather than selling more expensive houses to each other.

“To get a full appreciation of what’s going on across New Zealand, you’ve got to get out in the regions.”

Bagrie, who helped design the proposed 2% to 4% rates measure, says it is a target rather than a cap.

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