Global Shockwaves to Kiwi Shores - Iran Conflict Impact on New Zealand Economy
Summary
Reserve Bank of New Zealand Governor Dr Anna Breman delivered a keynote speech on March 24, 2026 examining how the ongoing Middle East conflict could affect the New Zealand economy. The speech projected higher headline inflation over the near term alongside somewhat weaker growth momentum. The Governor emphasized the RBNZ's readiness to manage challenges to its price stability and financial stability mandates, noting that banks have strong capital and liquidity buffers after recent stress testing.
“We are likely to see higher headline inflation over the near term, and somewhat weaker growth momentum.”
What changed
The speech discusses potential economic impacts on New Zealand from the Iran conflict, including near-term headline inflation pressures and weaker growth momentum. The Governor noted that while global financial stability risks could emerge affecting funding costs for NZ banks, recent stress testing shows banks are well-capitalized and positioned to weather severe geopolitical shocks. Domestically, financial stability concerns center on borrower resilience and squeezed business profitability, with expectations that banks will work with hardship-affected customers.
For financial institutions and business audiences, the speech provides reassurance about systemic resilience while flagging that borrowers and businesses may face increased pressure. The RBNZ signals it has tools to maintain inflation at the 2 percent target midpoint over the medium term, with the Official Cash Rate at 2.25 percent following a series of rate cuts. Core inflation remains steady at 2.4 percent and medium-term inflation expectations are well anchored, supporting a moderate policy outlook.
Scheduled event
- Date
- 2026-03-24
- Location
- Auckland
Archived snapshot
Apr 21, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
Anna Breman: Global shockwaves to Kiwi shores - the impact of the Iran conflict on New Zealand
Keynote speech by Dr Anna Breman, Governor of the Reserve Bank of New Zealand, to Business NZ's CEO Forum, Auckland, 24 March 2026.
Central bank speech | 21 April 2026 by Anna Breman PDF full text (883kb) | 11
pages Thank you for the warm welcome and the opportunity to speak with you today. I always find it valuable to meet with businesses and hear directly from you about the New Zealand economy. In times of high uncertainty, it is more important than ever.
Today, I am going to talk about the ongoing conflict in the Middle East and how it could impact the outlook for the New Zealand economy. We are likely to see higher headline inflation over the near term, and somewhat weaker growth momentum. I want to acknowledge the uncertainty and hardship that many households and firms are experiencing at this difficult time.
Importantly, I'd like to emphasise that the Reserve Bank is well positioned to handle the challenges to our price stability and financial stability mandates.
On financial stability, there is a risk that global financial stability risks could emerge and affect the cost and availability of funding for New Zealand banks. However, recent stress testing suggests that banks are resilient with strong capital and liquidity buffers, and are well-placed to weather severe geopolitical shocks. Domestically, the most likely concerns for financial stability are around the resilience of borrowers, and squeezed profitability for businesses. We expect that banks will work with customers experiencing hardship, and support them through this difficult and uncertain time.
On monetary policy, we have the tools to ensure that inflation remains at our 2 percent target midpoint over the medium term. The Official Cash Rate (OCR) is now at 2.25 percent after a series of rate cuts. Headline inflation is slightly above the target range, but core inflation has been steady at 2.4 percent for some time. We are at the early stages of an economic recovery. Inflation expectations over the medium term remain well anchored, and wage growth is subdued.
The views expressed in this speech are those of the speaker and do not necessarily reflect those of the BIS. About the author Anna Breman More from this author
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