New Zealand's central bank chief economist, Paul Conway, stated on Tuesday that domestic inflation may not decline as quickly as the bank previously anticipated, leaving the door open for potential further interest rate increases.

The Reserve Bank of New Zealand (RBNZ) last week revised down its third-quarter inflation forecast from 4.3% to 3.3%, primarily due to a drop in fuel prices following a temporary U.S.-Iran agreement. However, recent renewed conflict in the Middle East has triggered a rebound in international oil prices.

Conway, speaking at an event in Wellington, said, "The developments in the Middle East over the past week mean there is an upside risk to our September quarter inflation forecast. If inflationary pressures from the Middle East conflict persist longer than expected, we will implement corresponding policy measures."