RBNZ Governor Anna Breman delivered a clear warning that inflation risks are shifting to the upside, reinforcing a tightening bias despite a softer growth outlook. Speaking to Bloomberg TV, Breman said “the balance of risks have shifted in terms of inflation,” signaling growing concern that price pressures could re-accelerate.
More importantly, Breman left little ambiguity about the policy response. She stressed that if medium-term inflation begins to rise, “we will act decisively and that means rate hikes.” This marks a firm signal that the RBNZ is prepared to tighten again if needed, rather than tolerate a renewed inflation cycle.
Geopolitical uncertainty remains a key wildcard. Breman highlighted supply-side disruptions stemming from the conflict, noting that both the duration and scale of the impact remain unclear. This uncertainty is keeping the RBNZ in a data-dependent stance, but with a clear bias: inflation risks are rising, and policy will lean restrictive if those risks materialize.
