The economic outlook has deteriorated in both Australia and New Zealand. In Australia, the downturn in the housing market and falling business confidence should mean that GDP growth will continue to soften. In New Zealand, we expect GDP growth to remain subdued for the next two years. Underlying inflation slowed sharply in Australia in the first quarter and stopped rising in New Zealand. In response, we expect both the RBA and RBNZ to begin cutting interest rates to record lows, starting in May
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