NZD: RBNZ warns on upside inflation risks – BNY

Finance

NZD: RBNZ warns on upside inflation risks – BNY

BNYs Head of Markets Macro Strategy Bob Savage reports that Reserve Bank of New Zealand (RBNZ) Governor Anna Breman signaled readiness to hike rates if core inflation accelerates, citing upside risks from higher fuel prices tied to Middle East tensions. She stressed focus on core measures and expectations, while still projecting New Zealand growth this year, supporting a firmer New Zealand Dollar (NZD) and higher NZGB yields.

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“RBNZ Governor Breman said the central bank will ”act decisively“ with rate hikes if core inflation shows signs of accelerating, warning that risks to inflation have shifted to the upside amid higher fuel prices linked to Middle East tensions.”

“She emphasized that policymakers are closely monitoring core inflation, wage growth and expectations rather than headline price movements and reiterated the banks commitment to returning inflation to its 1–3% target range.”

“While acknowledging that near-term growth may be weaker, Breman maintained that the economy is still expected to expand this year, with uncertainty remaining elevated around the outlook.”