By Stella Qiu and Lucy Craymer
WELLINGTON, May 28 (Reuters) – New Zealand’s central bank is watching how much weaker demand from higher energy costs would hold back other price increases, a key determinant for how high interest rates will go, a top central banker said on Thursday.
Appearing before lawmakers, Anna Breman, Governor at the Reserve Bank of New Zealand, said households were turning more cautious and it was unclear if businesses would be able to pass on higher costs en masse.
• “We want New Zealanders to feel that we’re fully focused on bringing inflation back to target,” Breman told the parliamentary committee. She added, however, they remained focused on economic development and they would try to bring inflation back within the 1% to 3% band without causing unnecessary volatility.
• Breman said fuel prices were currently the major impact on inflation data but they were keeping an eye on how higher fuel and transport costs were feeding through to other products.
• The RBNZ held interest rates steady at 2.25% on Wednesday in a knife-edge decision and warned rate hikes would come sooner and by more than expected to counter a war-driven global energy shock.
(Reporting by Lucy Craymer and Stella Qiu; Editing by Nia Williams)
