RBNZ Warns Rising Oil Prices May Push Inflation Higher

The Reserve Bank of New Zealand is warning that rising oil prices could push near-term inflation rates higher than previously forecast. Governor Anna Breman said that recent increases in global oil prices and longer-term interest rates present a challenging environment for the economy.

Breman stated that if high oil prices persist, they would lead to somewhat higher near-term inflation than assumed in the September statement. She noted that the New Zealand economy is showing signs of recovery, with GDP growing by 0.2% over the three months to June, despite challenges from high oil prices and global economic conditions.

Breman highlighted the strength of the South Island economy, driven by a resilient export sector, low unemployment rates, and a strong housing market. She expects the economic recovery to gain strength and breadth across the country, supported by the performance of the export sector and increased household spending.