Heading into 2026, the RBNZ will be keeping a close eye on all incoming data<\/a>, and watching what develops globally to see how that could affect the New Zealand economy, she said.<\/p>\n \u201cI would like to stress that there is no pre-set course for monetary policy,\u201d Breman said.<\/p>\n While it\u2019s important to have a forward-looking policy rate plan published, it\u2019s also important that if circumstances change, if there\u2019s new data showing inflation and the economy is going in a different direction from expected, then the RBNZ would adjust its plans, she said.<\/p>\n \u201cIn this current environment when there\u2019s been a lot of turbulence over the past few years, it\u2019s important for households, [financial] markets and businesses to understand how we will act when we get that new information.\u201d<\/p>\n In technical terms, Breman said \u201csometimes we talk about the reaction function of the monetary policy committee and that\u2019s what I want to stress right now.\u201d<\/p>\n \u201cWe are are looking for where is inflation headed and to assess where inflation is headed, we need to look at the overall development of the economy, all the new incoming data, inflation expectations, transmission of monetary policy so that they understand that we will adjust to ensure that we meet the mandate,\u201d Breman said.<\/p>\n \u201cI think it\u2019s very important to understand how harmful and hurtful high inflation is.”\u00a0<\/p>\n Asked about her relationship with Finance Minister Nicola Willis and what she would like to see from her in the new year, Breman said she looked forward to having a professional working relationship with the Finance Minister.<\/p>\n Breman said it was important to think of fiscal policy as the job of the Minister.<\/p>\n \u201cHere at the Reserve Bank, we focus on our core mandates – low and stable inflation, financial stability and the payment system.\u201d<\/p>\n With her continual emphasis on the mandate, Breman said it was important that everyone understood the role of the Reserve Bank in the New Zealand economy.<\/p>\n \u201cI think I\u2019m simply doing it to stress where our focus will be and I\u2019m also doing it because we\u2019ve seen over the past few years how hurtful high inflation is, how much it harms households and businesses.”<\/p>\n \u201cIt erodes purchasing power. Volatile inflation is very complicated for small businesses to handle as well. So I\u2019m focusing on that because this is what we are expected to achieve – inflation within the target range, focusing on the midpoint.\u201d<\/p>\n “You want an economy that has lower, stable inflation because it helps to foster prosperity for all New Zealanders,\u201d Breman said.<\/p>\n Economic growth was important but the central bank\u2019s tools are set up to focus on low and stable inflation, she said, which will promote growth and a strong labour market.<\/p>\n Comfortable with RBNZ independence<\/p>\n With an election next year Breman said she was very comfortable the RBNZ has strong independence.<\/p>\n \u201cThe Monetary Policy Committee has a lot of integrity. We know what the mandate is and we will work to ensure that we reach that mandate.\u201d<\/p>\n Asked about potential shocks that could sideswipe New Zealand, Breman said: \u201cI think it\u2019s important to have preparedness for all eventualities, which is almost impossible of course.\u201d<\/p>\n \u201cBut if we get too focused on one thing, there might be something else that\u2019s really important \u2026 There are risks we have to consider but we have two tasks. One is to analyse and prepare for these kinds of event affecting the economy and the other is preparing for it in terms of our operational resilience.\u201d<\/p>\n \u201cI think the main thing is to keep looking at all the different things that are happening in the global environment and looking at the analysis of how will this affect the New Zealand economy.”<\/p>\n Breman said: \u201cThat is really key for us. What is happening with trade, what\u2019s happening in other areas and how do they translate into economic developments in New Zealand for households and businesses.\u201d<\/p>\n Mortgage rates & housing\u00a0<\/p>\n Asked about her thoughts on\u00a0Westpac NZ<\/a>\u00a0increasing\u00a0fixed home loan rates<\/a>, Breman noted wholesale market interest rates had risen.<\/p>\n \u201cMy understanding is that the shortest variable rates have followed downwards after the rate cuts but the longer dated mortgage rates have gone up.”<\/p>\n \u201cWe have to look at the overall picture but one way as an economist to describe that is to say that some part of financial conditions have tightened a bit and we have to evaluate how that affects the economy if that\u2019s in line with the transmission that we want in monetary policy.\u201d<\/p>\n Breman said the RBNZ\u2019s focus will be to see how this affects households, firms and businesses and if that is in line with economic developments they\u2019re expecting.<\/p>\n Property is very important for households and small businesses, Breman said, and it was something that affected how the economy evolves.<\/p>\n \u201cWe\u2019ve seen very low levels of constructions of new homes over the past few years and that\u2019s been a drag on growth. We don\u2019t have a mandate in terms of house prices but of course, we very carefully follow developments in the housing market and how that affects the overall health of the economy.\u201d<\/p>\n Comfortable with prudential regulation<\/p>\n Asked how she would conduct prudential regulation having come from The Riksbank which primarily focuses on monetary policy, Breman said in her previous role, the Swedish bank had a mandate for monetary policy, financial stability and the payment system.<\/p>\n \u201cSome of the work on financial stability policy that we were doing was also closely related to some of the prudential side,\u201d Breman said.<\/p>\n \u201cWe didn\u2019t have responsibility for the prudential side but we were in a group collaborating between the Financial Supervisory Authority who had that mandate, the Debt Office who had their solution and the central bank who were doing work on financial stability.”<\/p>\n \u201cSo I feel very comfortable working with prudential supervision at the Reserve Bank.\u201d<\/p>\n When asked by a reporter if she would be comfortable if a future government broadened the mandate (for example, putting employment back into it), Breman said it was important to respect the democratic process.<\/p>\n The RBNZ would always do what is mandated in legislation, she said.<\/p>\n Breman said she did not have a preference for a single mandate.<\/p>\n Reserve Bank Governor Anna Breman speaks to media in December. Image source: Mandy Te<\/p>\n Breman, who was previously the First Deputy Governor of Sweden\u2019s central bank, had her appointment first announced at a press conference with Willis<\/a> in September.<\/p>\n<\/p>\n