Anna Breman said inflation expectations had been rising among economic forecasters and businesses - something she was not happy about.
Speaking at a Business Canterbury event in Christchurch on Friday, she said firms trying to hike prices faced an uphill battle.
"In our view, given that wage growth is still subdued, given that the labour market is starting to increase - but households will want to see more of that - we think it will be very difficult for firms to pass on big price increases."
Breman said households were still struggling with cost-of-living pressures and a weak jobs market, and higher prices would weigh on consumer spending.
Meanwhile, she warned that volatility - from geopolitical tensions to developments in artificial intelligence - could still throw up surpises for inflation.
She said the Monetary Policy Committee would stay responsive to those risks, but would not overreact to short-term volatility.
