NEW ZEALAND FINANCE MINISTER: TREASURY PROJECTS INFLATION COULD REACH 7.4% IN 25/26 UNDER WORST CASE IRAN WAR SCENARIO

New Zealand’s Finance Minister disclosed that Treasury modeling forecasts inflation could peak at 7.4% in the 2025/26 fiscal year under a worst-case scenario involving a major escalation of conflict in Iran. The transmission channel is primarily through elevated global oil prices and supply chain disruptions, which would amplify imported inflation and pressure the Reserve Bank of New Zealand to maintain restrictive monetary policy. This scenario disproportionately affects New Zealand’s interest rate-sensitive assets, including the NZD and domestic bonds, while also increasing risk premiums in commodity-linked equities. Traders will closely monitor the upcoming RBNZ monetary policy statement and international crude oil inventory data as near-term catalysts for reassessing inflation trajectory risks.

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