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Central BanksMediumUpdated•Originally published 23 March 2026•Updated 24 March 2026•
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RBNZ Signals Potential Rate Hikes as Iran Conflict Drives Oil Prices Higher

Key Facts

1The Reserve Bank of New Zealand indicated it could raise interest rates if the surge in oil prices related to the Iran war persists.
2The bank aims to prevent inflation from becoming sustained at high levels due to energy price shocks.

The Reserve Bank of New Zealand (RBNZ) has signaled potential interest rate hikes to combat rising inflationary pressures driven by higher global oil prices. Governor Anna Breman warned that the Middle East conflict is likely to push the economy into a challenging environment of higher inflation and weaker growth momentum, highlighting stagflationary risks. However, Breman cautioned against overreacting to the expected inflation spike, despite acknowledging the severity of the geopolitical shock. The central bank remains focused on preventing inflation from becoming entrenched above its target range while mitigating energy price impacts. Consequently, the New Zealand Dollar (NZD) is expected to find support as markets price in potential policy tightening. This stance aligns with the recent hawkish trend observed at the Reserve Bank of Australia (RBA).