Sharon Zollner: ANZ Chief Economist on the economic fallout from the conflict in the Middle East
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Sharon Zollner: ANZ Chief Economist on the economic fallout from the conflict in the Middle East
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“Enormous” swings in the price of oil are making it very difficult to gauge the severity of the shock to markets from the Iran war, ANZ chief economist Sharon Zollner says.
Oil hit $120 per barrel yesterday but dropped back below $100 after the G7 nations signalled they could release strategic oil reserves.
Zollner told Ryan Bridge she agreed with Finance Minister Nicola Willis' assertion that the duration of the shock was just as important as its size.
Market volatility would continue, with “headlines all over the place”, and that uncertainty could lead to people spending less money.
But central banks would be keen not to do anything rash by rushing to raise interest rates, Zollner said.
For New Zealand’s Reserve Bank, “as long as inflation expectations remain well anchored then they can tolerate a bit of noise in the near term, rather than feel they need to deliberately head the recovery off in order to make sure inflation's back at 2% quickly”.
But if the shock was long and sustained “it will be more difficult to look through those inflationary impacts - and then it could get a bit ugly”.
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