Source: Radio New Zealand
Reserve Bank governor Anna Breman. RNZ / Samuel Rillstone
The Reserve Bank governor has warned businesses against trying to pass higher prices on to households.
Anna Breman said inflation expectations have been rising among economic forecasters and businesses – something she is not happy about.
Speaking at Business Canterbury in Christchurch on Friday, she said firms trying to hike prices face an uphill battle.
“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.”
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.
Meanwhile, she warned that volatility – from geopolitical tensions to developments in artificial intelligence – could still throw up surpises for inflation.
She said the Monetary Policy Committee will stay responsive to those risks, but will not overreact to short-term volatility.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
