FX.co ★ New Zealand Inflation Threatens to Break Higher as Energy Costs Rise

New Zealand Finance Minister Nicola Willis warned on Monday that inflation could rise “much higher” this year and remain above the central bank’s 1%–3% target band if tensions in the Middle East continue. Treasury modelling indicates a steeper inflation peak under a scenario of prolonged conflict and more severe supply chain disruptions. Inflation was already running at 3.1% in the fourth quarter, above the target ceiling, with higher energy prices strengthening market expectations of imminent monetary tightening. Willis declined to offer specific projections, saying Treasury has not yet finalized its central scenario.