Reserve Bank Governor Alan Bollard has done what most pundits were picking and raised the Official Cash Rate 25 basis points to 3%.

Dr Bollard moved the rate up from an historic low of 2.5% in June, and says while the economic outlook has softened since then, a further move away from the stimulus measures of the recession is justified.

ASB rural economist James Shortall says the move is no surprise as the economic outlook is still positive.

“Their statement did suggest that New Zealand’s economic outlook has softened a little bit recently with slightly lower housing markets as well as economic uncertainty coming out of Europe.

"This has seen some of our commodity prices soften recently –  all up this does mean that they may relook at the OCR increases down the track. However we continue to forecast future increases of the Official Cash Rate.”

Federated Farmers has been calling for the rate to stay at 2.75%, President Don Nicolson says any increase will hit farmers trying to repay debt.

"The confidence in this country doesn’t appear to be at a high, that’s for sure.

"Farmers, business people and New Zealanders need that confidence in order to invest their money wisely. What’s stopping that is the constant drain of government costs from the people in New Zealand who want to create real wealth.”