In the latest Official Cash Rate (OCR) monetary policy update<\/a>, the Reserve Bank opted to keep the rate on hold, saying that it balanced the benefits of responding pre-emptively with the cost of unnecessarily stifling the economic recovery. <\/p>\n\u201cIn the near term, inflation is expected to increase and the economic recovery to weaken,\u201d the Reserve Bank said. <\/p>\n
Conflict in Iran had disrupted global supply chains, prompting oil and fuel prices to increase significantly.<\/p>\n
Willis said it was important to be \u201copen and transparent\u201d and not fudge around the fact that if oil prices got \u201creally high\u201d, that inflation could \u201cget really bad here\u201d.<\/p>\n
But Willis said in terms of future orders, fuel importing companies are telling the Government that their orders are secure through until the end of May.<\/p>\n
She said these companies have told them that they are not having challenges placing future orders into June.<\/p>\n
In addition, New Zealand\u2019s Consumers Price Index increased 3.1% in the 12 months to the March 2026 quarter, according to figures released by Stats NZ on Tuesday. This was higher than most economists\u2019 estimates and has, according to market pricing, lifted the odds of an OCR hike in May.<\/p>\n
![\"Finance]()
Finance Minister Nicola Willis (inset) says it is important that the Government has been up front about the impact the oil crisis is having on the economy. Photo \/ New Zealand Herald composite image<\/p>\n
Yesterday, rating agency Moody\u2019s downgraded New Zealand\u2019s financial outlook to negative, although affirmed New Zealand\u2019s AAA credit rating.<\/p>\n
Willis said New Zealand\u2019s economic recovery had been harder than what had been forecast a few years ago.<\/p>\n
\u201cThe impact of that has been not only to New Zealanders and their jobs and livelihoods, but also to government books.<\/p>\n
\u201cAnd so, what Moody\u2019s is saying is it\u2019s really important you stick to those goals of getting the books in balance and bending the debt curve down,\u201d she said.<\/p>\n
\u201cI think that what they worry is that future politicians will take their eye off those really important targets,\u201d Willis said.<\/p>\n
She said some people, amid the ongoing economic turmoil, might call for the reduction of funds going into new hospital developments.<\/p>\n
But Willis said: \u201cI have to look the New Zealanders in the eye who are waiting for hip operations, who need cancer treatment, and tell them there\u2019s not more money for the hospitals. I\u2019m not prepared to do that.\u201d<\/p>\n
Budget warning: Economist wary of pending package<\/p>\n
Infometrics\u2019 principal economist Brad Olsen warned that Willis\u2019 Budget next month was not \u201cgoing to look great\u201d and believed the country\u2019s much-promised return to surplus could be pushed out by another year.<\/p>\n
\u201cInflation pressures also persist, including fuel price increases, stubborn non-tradeable housing costs and utility prices, and higher electricity costs,\u201d the agency said in its report late yesterday.<\/p>\n
In March, ratings agency Fitch also downgraded New Zealand\u2019s outlook from stable to negative, citing debt reduction concerns.<\/p>\n
Willis has already said this year\u2019s Budget<\/a> would be \u201cresponsible\u201d where there would be \u201cno splashing of cash\u201d.<\/p>\nJulia Gabel is a Wellington-based political reporter. She joined the Herald in 2020 and has most recently focused on data journalism.<\/p>\n","protected":false},"excerpt":{"rendered":"\u201cIf that does remain the case, we face some significant short-term challenges and heightened medium to long-term risks.\u201d…\n","protected":false},"author":2,"featured_media":393192,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[1558,138,3013,10669,172376,10668,219,246,1437,23500,16609,185,225,6722,111,139,20484,5006,69,1881,312,792,2963],"class_list":{"0":"post-393191","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-been","9":"tag-business","10":"tag-but","11":"tag-delayed","12":"tag-derailed","13":"tag-economic","14":"tag-economy","15":"tag-finance","16":"tag-global","17":"tag-impact","18":"tag-iran","19":"tag-is","20":"tag-market","21":"tag-minister","22":"tag-new-zealand","23":"tag-newzealand","24":"tag-nicola","25":"tag-not","26":"tag-nz","27":"tag-recovery","28":"tag-says","29":"tag-willis","30":"tag-zealands"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/393191","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=393191"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/393191\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/393192"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=393191"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=393191"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=393191"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}