RBNZ flags potential rate hikes over energy cost risks

Governor Anna Breman says the bank may raise rates if energy shocks impact long-term inflation. Markets now price in a potential 25 basis point hike for May.

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The head of the central bank in New Zealand stated on Tuesday that monetary policy would likely overlook temporary spikes in energy costs, though higher interest rates remain a possibility if inflation becomes entrenched. Governor Anna Breman noted that the duration of energy shocks, specifically those stemming from conflict in the Middle East, is a critical factor in balancing inflation risks against economic growth.

Reserve Bank of New Zealand Governor Anna Breman during an announcement at parliament in Wellington. REUTERS/Marty Melville/File Photo
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