WELLINGTON, July 9 (Xinhua) -- New Zealand's central bank said renewed tensions in the Middle East underscore ongoing inflation risks, as the bank raised interest rates for the first time in more than three years.
The Reserve Bank of New Zealand (RBNZ) on Wednesday lifted its official cash rate by 25 basis points, with Governor Anna Breman citing rising oil prices following a resurgence of hostilities between the United States and Iran, Radio New Zealand (RNZ) reported on Thursday.
Brent crude rose more than 5 percent to about 78 U.S. dollars a barrel on Thursday, extending gains from the previous day.
Breman told RNZ that higher fuel costs remain a key inflation risk, warning that prolonged conflict could entrench price pressures. "There's a risk this will become embedded," she said, adding the bank's role was to prevent inflation staying elevated for too long.
The RBNZ expects annual inflation to peak at 3.9 percent in the June quarter, above its 1-3 percent target range, though lower than an earlier 4.3-percent forecast.
Despite disruptions, including the closure of the Strait of Hormuz, Breman said shipping routes continued to function.
According to the governor, economic recovery was underway in New Zealand and could prove stronger than expected, though many households had yet to feel the improvement. ■