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The new Reserve Bank Governor, Dr Anna Breman, is monitoring the impact of tightening financial conditions following the central bank cutting the Official Cash Rate a fortnight ago.

The tone the Reserve Bank struck in its commentary last month gave the market the impression it was closing the door to the possibility of the Official Cash Rate (OCR) being cut again in this cycle.

This caused swap rates to spike, pushing Westpac to hike its longer-term mortgage and term deposit rates by 30 basis points.

The concern among some observers is that retail banks might lift their interest rates prematurely, stymying the economic recovery.

Speaking to media at a breakfast on Wednesday morning, Breman was asked to share her view on the situation.

She declined the opportunity to explicitly talk the market up or down.

Rather, she stressed a couple of times: “There is no preset course for monetary policy.”

Breman said she would look at all the economic data due out before the Monetary Policy Committee next reviews the OCR on February 18.

She said that if circumstances changed, the Reserve Bank would adjust its stance accordingly.

This said, she noted she was yet to meet all the other Monetary Policy Committee members, who collectively set the monetary policy.

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Breman said the outlook for inflation was “favourable” and noted there were risks to both the upside and the downside.

There was no major initial market reaction to Breman’s comments being published.

Her predecessor Christian Hawkesby declinedto talk down the market when the Herald interviewed him on November 27.

Asked what he made of swap rates rising, Hawkesby said: “I think we had an awareness of what the market reaction might be to our decision ... We always have our markets team brief us on the likely reactions to different decisions we make. So it sort of fell in the ballpark of what we expected.”

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.