The Reserve Bank of New Zealand highlights inflation concerns and says it will take decisive action if necessary

Golden Ten Data reported on April 8 that the minutes from the Reserve Bank of New Zealand meeting showed the committee discussed taking “preemptive” action to guard against the risk of inflation expectations spiraling out of control. Influenced by the hawkish tone, the New Zealand dollar briefly strengthened to 0.5819. Marcel Thieliant, Head of Asia-Pacific at Capital Economics, stated that the Reserve Bank of New Zealand seems to have a contradictory stance on the “impact of the energy shock.” “As a result, we expect the Reserve Bank will tighten policy in the fourth quarter, rather than the third quarter as predicted by OIS markets.” The Reserve Bank of New Zealand did not provide a comprehensive economic forecast in this monetary policy assessment, but stated that inflation is expected to rise to 4.2% in the June quarter. The statement read: “The extent of the recent rise in overall inflation will depend on how the Middle East conflict develops, as well as the degree and duration of disruptions in global supply chains and energy markets.”