That easing backdrop, combined with improving underlying momentum seen earlier in the year, leaves the economy well placed to strengthen—provided external risks begin to fade.
Her comments build on earlier guidance that high-frequency indicators pointed to a pickup in activity through January and February, before geopolitical tensions began to weigh on sentiment into March and are expected to soften conditions further in April.
However, Breman emphasised that the outlook remains highly uncertain, with the duration and severity of the Middle East conflict representing the key swing factor. She noted that beyond oil prices, the broader impact of supply disruptions is likely to shape both growth and inflation dynamics in the near term.
A swift de-escalation would likely ease pressure on fuel costs and improve business confidence, supporting a rebound in activity. Conversely, a prolonged conflict risks extending supply chain disruptions and keeping inflation elevated, complicating the recovery.
The RBNZ’s current stance reflects this balance
