The Reserve Bank has lifted the Official Cash Rate up 25 basis points to 2.75 per cent.

Banks are expected to follow and lift floating mortgage rates soon.

This is the first increase by Reserve Bank Governor Allan Bollard of the official rates since 2007, when they hit 8.25 per cent.

Since April 2009, they’ve been at a record low 2.5 per cent.

Increases in goods and services tax and the Emissions Trading Scheme are expected to push the consumer price index well above 5 per cent by the first quarter of 2011.

Meantime, Federated Farmers had asked the Governor of the Reserve Bank to keep the OCR on hold until at least July.

Philip York, Federated Farmers economics and commerce spokesperson, says the export economy remains fragile despite some recent gains.