SYDNEY, Sept 22 (Reuters) - New Zealand's top central banker said on Tuesday if recent gains in oil prices persist it would lead to "somewhat" higher inflation than previously forecast, adding that there remained significant risks to the country's economic recovery.
In notes from a speech given in Dunedin, Reserve Bank of New Zealand Governor Anna Breman said the economic recovery was expected to strengthen and broaden, supported by exports and a gradual increase in household spending.
"Recent increases
in global oil prices and longer-term interest rates reflect the challenging environment we face," Breman said. "If higher oil prices persist, they are expected to result in somewhat higher near-term inflation than we assumed in the September statement."
The central bank raised its main cash rate by a quarter point to 2.75% at its September policy meeting, but projected a more gradual path for additional tightening than many in the financial markets had expected.
It also forecast that consumer price inflation would slow slightly to 3.9% in the September quarter from 4.1% the previous quarter.
"As always, we will assess incoming data and global developments ahead of our next decision in October and remain focused on the outlook for inflation over the medium term," Breman added.
The RBNZ meets on October 28 and markets imply a 75% chance that it will raise rates again to 3%.
(Reporting by Wayne Cole; Editing by Thomas Derpinghaus)
