Alan Bollard does not enjoy raising interest rates but sometimes that's his job and he has done it.
He has given the money markets what they were looking for, and exporters what they dreaded, a rise in the official cash rate to 8.25 per cent.
The consolation is
that his statement suggests this is the top of the interest rate cycle.
He acknowledges that the very high exchange rate is hurting exports. He blames it not only on US dollar weakness but on New Zealanders' heavy demand for borrowing.
But he says we have been showing early signs of moderating our borrowing.
Provided we keep this up, and provided the pressure on the economy's productive resources continued to ease, the four interest rate increase he has delivered since March should be enough.
That statement is probably intended to reinforce the warning he gives to offshore investors who have been bidding up the kiwi dollar: "The high New Zealand dollar is not sustainable medium term and investors need to understand this."
In explaining the rate increase he cites the dairy boom, the tight labour market, and rise fuel and food prices, all of which he says point to sustained inflationary pressures.
But conspicuously absent from that list is the housing market.
That omission and the reference to borrowers moderating their behaviour suggests he is becoming more relaxed about the housing market as a hotbed of inflation.
