{"id":355033,"date":"2026-03-24T06:11:15","date_gmt":"2026-03-24T06:11:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/355033\/"},"modified":"2026-03-24T06:11:15","modified_gmt":"2026-03-24T06:11:15","slug":"governor-anna-breman-says-reserve-bank-unlikely-to-lift-interest-rates-directly-in-response-to-oil-price-spikes","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/355033\/","title":{"rendered":"Governor Anna Breman says Reserve Bank unlikely to lift interest rates directly in response to oil price spikes"},"content":{"rendered":"She said the shock had sent waves through complex global supply chains, and it would take time for the full effect to play out. <\/p>\n
\u201cWe should try to avoid reacting too early to near-term inflation pressures that monetary policy can do little about \u2013 or reacting too late if above-target inflation becomes embedded in the economy,\u201d Breman said.<\/p>\n
\u201cTo meet our core mandate of price stability, monetary policy can and should ensure that a near-term inflation spike does not turn into enduring inflationary pressures. <\/p>\n
\u201cThe committee will be vigilant to this risk.\u201d<\/p>\n
Breman said that over coming months, the committee would look closely at the \u201csecond round impacts\u201d of higher oil prices to understand how the balance of inflationary pressures is likely to evolve.<\/p>\n
Accordingly, it would keep a close eye on surveys that show how businesses are likely to increase their prices and wages.<\/p>\n
Breman didn\u2019t want to pre-empt the outcome of the next OCR review, set down for April 8. Rather, she wanted to outline the Reserve Bank\u2019s thinking.<\/p>\n
\u201cOur target is forward looking, meaning it is the medium-term outlook for inflation that guides our monetary policy decisions,\u201d she said.<\/p>\n
\u201cThis means balancing higher near-term inflation and potentially higher inflation expectations against a weaker growth outlook. <\/p>\n
\u201cKey to this balance, the duration of the shock is an important factor in considering the appropriate monetary policy response.\u201d<\/p>\n
Breman\u2019s speech tempered financial markets a little. <\/p>\n
They had been reacting strongly to the prospect of higher oil prices seeing inflation bed in.<\/p>\n
Indeed, wholesale interest rates had risen sharply, prompting banks to lift some of their mortgage and term deposit rates. <\/p>\n
Meanwhile, markets had priced in a 20% chance of the OCR being hiked on April 8, and a 100% chance of it rising by July.<\/p>\n
Following Breman\u2019s speech, markets priced in a 12% chance of an April hike, a 50% chance of a May hike, and a 100% chance of a July hike.<\/p>\n
In February, before conflict escalated in the Middle East, the Reserve Bank pencilled in its first OCR hike for later in the year. This would see the OCR be a little less stimulatory than it currently is, at 2.25%.<\/p>\n
Local economists typically don\u2019t see the OCR rising as quickly as the market does. They are wary the sluggish economy might limit the extent to which businesses will be able to pass higher costs onto their customers.<\/p>\n
Coming back to Breman, she said fiscal policy (ie the tax and welfare system, which the Government controls) was best placed to support households most vulnerable to price increases. <\/p>\n
However, she stressed that any support should be targeted, timely and temporary to avoid putting upward pressure on inflation. <\/p>\n
Jen\u00e9e Tibshraeny is the Herald\u2019s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.<\/p>\n
Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter<\/a> \u2013 your essential weekly round-up of all the business news you need.<\/p>\n","protected":false},"excerpt":{"rendered":"She said the shock had sent waves through complex global supply chains, and it would take time for…\n","protected":false},"author":2,"featured_media":355034,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[39890,5596,172349,114,8546,12651,172351,184,21921,23602,85,2314,932,6203,46,9556,4946,5839,6765,159534,38857,6204,5612,93834,21047,172352,273,172350],"class_list":["post-355033","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-anna","tag-bank","tag-breman","tag-business","tag-cash","tag-central","tag-directly","tag-economy","tag-governor","tag-hike","tag-il","tag-in","tag-inflation","tag-interest","tag-israel","tag-lift","tag-official","tag-oil","tag-price","tag-pushing","tag-rate","tag-rates","tag-reserve","tag-response","tag-says","tag-spikes","tag-to","tag-unlikely"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/355033","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=355033"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/355033\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/355034"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=355033"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=355033"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=355033"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}