The Reserve Bank governor has raised the official cash rate, as expected.

He also signalled a pause in rate hikes, to assess the impact of moves so far this year.

The Kiwi dollar sank after he said its strength was unjustified, and that the currency could have a significant fall.

The quarter point increase in the official cash rate to 3.5% was forecast by economists.

It is expected the central bank will wait, possibly until next year, before hiking again.

That's in the face of falling commodity prices, relatively tame inflation and signs that house price inflation is moderating.