The Reserve Bank governor has warned businesses against trying to pass higher prices on to households.<\/p>\n
Anna Breman said inflation expectations have been rising among economic forecasters and businesses – something she is not happy about.<\/p>\n
Speaking at a Business Canterbury event in Christchurch on Friday, she said firms trying to hike prices face an uphill battle.<\/p>\n
“In our view, given that wage growth is still subdued, given that the labour market is starting to increase – but households will want to see more of that – we think it will be very difficult for firms to pass on big price increases.”<\/p>\n
Anna Breman said households are still struggling with cost-of-living pressures and a weak jobs market, and higher prices will weigh on consumer spending.<\/p>\n
Meanwhile, she warned that volatility – from geopolitical tensions to developments in artificial intelligence – could still throw up surpises for inflation.<\/p>\n
She said the Reserve Bank’s monetary policy committee will stay responsive to those risks, but will not overreact to short-term volatility.<\/p>\n