On Wednesday, New Zealand's central bank met market expectations by lifting the official cash rate (OCR) to three per cent.
It also released a gloomy set of new projections for the Kiwi economy, believing interest rates will stay higher for longer, that house prices will drop further than expected, and unemployment will rise faster than first thought.
With consumer price index inflation at a 32-year high of 7.3 per cent, the RBNZ has no choice but to lift the official cash rate.
Just as in Australia, the RBNZ's target band for inflation is one to three per cent.
The RBNZ has now raised rates from an emergency low of 0.25 per cent last October, including an unprecedented run of four 50 basis point hikes at the last four meetings.
"Core consumer price inflation remains too high and labour resources remain scarce,"Â Governor Adrian Orr lamented.
"We are adamant that we're in a very strong position to be on top of inflation.
"A bit more work to do, but we're confident."
Some New Zealand banks predicted the shock-and-awe option of a 75 basis point hike, but Mr Orr said it wasn't considered.
The RBNZ has published a worsening set of forecasts in its August Monetary Policy Statement, believing the OCR will peak at 4.1 per cent in March 2023.
While the bank predicts inflation will now begin to subside, Mr Orr said a gloomy international outlook would keep it above the target band until "the middle of 2024".
The projections see a 15 per cent loss in house prices from their peak in December 2021 before the rebound begins mid-way though 2023.
Mr Orr said he was aware the interest rate rises would cause pain for homeowners, who needed to "sit it out".
"Inflation really is a thief in the pocket," he said.
"We aren't heartless.
"The interest rate levels we're looking at at the moment are survivable but will mean for recent buyers some belt tightening."
Mr Orr cited dampening prospects for growth and upward pressures on commodity prices due to Russia's invasion of Ukraine in the RBNZ's judgement.
The bank has also predicted a higher unemployment rate than its previous forecasts - though still low by historical standards.
Currently at a basement 3.3 per cent, the jobless rate is tipped to rise to 4.5 per cent by the end of next year, topping out at five per cent in 2025.
There is some good news in the new forecasts, including an economic bounceback that will see New Zealand avoid recession.
The RBNZ has tipped 1.8 per cent growth in the second quarter this year after a surprise 0.2 per cent contraction in the first quarter.