New Zealand central bank chief sees risks to economy, inflation

SYDNEY: New Zealand’s top central banker said on Tuesday if recent gains in ​oil prices persist it would lead to “somewhat” higher ‌inflation than previously forecast, adding that there remained significant risks to the country’s economic recovery. In notes from a speech given ​in Dunedin, Reserve Bank of New Zealand Governor ​Anna Breman said the economic recovery was expected ⁠to strengthen and broaden, supported by exports and a ​gradual increase in household spending. “Recent increases in global oil prices ​and longer-term interest rates reflect the challenging environment we face, ” Breman said. “If higher oil prices persist, they are expected to result ​in somewhat higher near-term inflation than we assumed in ​the September statement. ” The central bank raised its main cash rate by ‌a ⁠quarter point to 2. 75% at its September policy meeting, but projected a more gradual path for additional tightening than many in the financial markets had expected. It also ​forecast that consumer ​price inflation ⁠would slow slightly to 3. 9% in the September quarter from 4. 1% the previous quarter. “As ​always, we will assess incoming data and ​global developments ⁠ahead of our next decision in October and remain focused on the outlook for inflation over the medium term, ” ⁠Breman ​added. The RBNZ meets on October ​28 and markets imply a 75% chance that it will raise rates ​again to 3%.

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