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New Zealand central bank governor signals earlier and steeper rate hikes

BY Reuters | ECONOMIC | 05/28/26 09:34 PM EDT

May 29 (Reuters) - Reserve Bank of New Zealand Governor Anna Breman said on Friday interest rates were likely to increase sooner and by more than previously signalled to combat inflation.

The central bank held the official cash rate (OCR) steady this week at 2.25% after Breman used her casting vote to break a 3-3 split among monetary policy committee members.

"The committee remains focused on ensuring inflation returns to target while avoiding unnecessary volatility in the economy," Breman said.

"On balance, the OCR is likely to increase sooner and by more than previously signalled." (Reporting by Christine Chen in Sydney; Editing by Muralikumar Anantharaman)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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