WELLINGTON, July 30 (Xinhuanet) -- The Reserve Bank of New Zealand raised its official cash rate by a quarter of a percentage point Thursday and drew mixed reactions from financial and business circles.

   In a monetary statement, Governor Alan Bollard announced the interest rate hike from 5.75 percent to 6.0 percent, the fourth time it has lifted rates this year to combat inflation pressures in the economy.

   New Zealand already has the highest interest rates in the developed world, and Thursday's 25 basis point raise lifted the official cash rate to its highest level in more than three years.

   New Zealand's cash rate compares with official rates of 5.25 percent in Australia, 1.25 percent in the United States and 2 percent in the euro zone.

   The Reserve Bank said the economy was buoyant, putting a strain on resources and causing inflation pressures.

   Since the bank's June 10 monetary policy statement, economic signals have been mixed.

   Business and consumer confidence has improved, the economy has been estimated to be running at near full capacity, and commodity prices have been strong.

   The gross domestic product rose 2.3 percent in the first quarter on the previous quarter, to be 5.0 percent higher than a year earlier.

   On the other hand, house sales, migration and retail sales have all fallen.

   Bollard is almost certain to lift interest rates again in September and possibly in October, economists say.

   National Bank Chief Economist John McDermott said that "the economy is running too strong and they need to take action and keep a cap on inflation. If that (central bank) assessment is correct you don't just tinker around - you have to get rates above neutral with a plan of 6.5 percent."

   That was likely to be the peak, "but there is no guarantee" with floating mortgage rates going to 8.5 percent and maybe higher, he said.

   That would "cool" the housing market, with prices flat in six
months or so.

   Harcourts real estate Chief Executive Bryan Thomson said he did not expect a big fall in house prices, even if floating rates neared 9 percent.

   The Property Institute said Thursday that rents would rise because of rising interest rates. But Thomson said the chances of increasing rents were "not great" because of falling migration, and rents were actually slipping in Auckland.

   However, some economists said it was not clear why rates would need to rise again, with inflation still at 2.5 percent, within the Reserve Bank target, and signs that the domestic economy was slowing.

   Westpac Bank economists said Thursday's rate rise was "probably not" needed and this year's rises would be next year's cuts.

   Small manufacturers exporting to Australia are already feeling the pain of a high exchange rate and that is likely to get worse.

   "The economy is now firing on all cylinders at just the wrong time for the (central) bank," Bank of New Zealand said, pointing to soaring world commodity prices and a Kiwi dollar much lower than it was in February.

   South Island-based The Press noted that interest rate hike would leave home owners with floating interest rates of up to 8.5 percent - the highest in the western world.

   It quoted John Exton, general manager of Christchurch Budget Advisory Service, as saying that together with the rise of oil and electricity prices, families should batten down the hatches.

   "If you take all the things into account there is some tight stuff coming. Families should be looking at their spending plans --sometimes it's scary to do that -- but it's easy to slip into a financial hole," he said.

   UBS economist Robin Clements said the bank's tone was "as hawkish as it could be" Thursday, and another rise in interest rates was likely in September.

   He said it was likely that some families were starting to feel the pinch more, which was precisely what the Reserve Bank wanted to see.

   "The aim is to take some of the spending ability out of the economy and to cool it down," Clements said.  Enditem