New Zealand’s central bank may raise rates sooner and more aggressively due to Middle East conflict-driven inflation and weaker growth.
Reserve Bank of New Zealand Governor Anna Breman indicated the Official Cash Rate (OCR) will likely increase earlier and by a larger margin than previously signaled. The shift follows rising input costs and supply chain disruptions linked to the Middle East conflict, which are expected to weigh on growth while fueling near-term inflation.
Breman’s remarks follow earlier comments from RBNZ Assistant Governor Karen Silk, who suggested a bias toward rate hikes in upcoming meetings, with July now considered a potential decision point. ANZ Research had already projected rate increases starting in July, targeting a neutral OCR of around 3%.
The RBNZ’s stance reflects concerns that inflation expectations could remain elevated amid persistent cost pressures, even as economic growth slows.