Despite inflation reaching an eighteen year high yesterday, The reserve bank is still expected to cut the official cash rate by around one percent tomorrow.

The cash rate, which is the highest in the developed world, has held it current position due to a riotous housing market, but inflation is now the key economic concern.

Tony Conroy From Forsyth Barr says dropping the cash rate one percent should theoretically stimulate growth, promoting investment as people will have more money in their back pockets.

Inflation is already well past the preferred one to three percent range, food and petrol being the main perpetrators of the continual increase.

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