Australia & New Zealand Economics Update RBA recapitalisation would lift public debt Rising interest rates will result in the RBA making further losses in the years ahead. The Bank’s existing reserves should be enough to absorb those losses in a benign scenario, but the Bank will stop... 9th November 2021 · 3 mins read
Australia & New Zealand Economics Update Australia- The impact of rate hikes on household finances If the RBA hiked rates by nearly 200bp as the financial markets were anticipating until recently, households’ debt servicing burden would hit an all-time high and housing would become the least... 3rd November 2021 · 3 mins read
Australia & New Zealand Economics Update Patient RBA set to hike rates only gradually The RBA abandoned its yield target and its pledge that rates will remain low until 2024 today, but still sounded dovish. While the financial markets expect the first rate hike in May next year, we... 2nd November 2021 · 3 mins read
Australia & New Zealand Economics Update Structural slowdown in China a key threat to Australia Australia’s exports to China are even more vulnerable to a slowdown in the property sector than they were before the trade spat as iron ore has gained in importance. We think that China’s steel demand... 13th October 2021 · 3 mins read
Australia & New Zealand Economics Update RBNZ to continue hiking rates as restrictions ease The RBNZ’s decision to begin its hiking cycle while Auckland is still in lockdown highlights that the New Zealand economy is on the brink of overheating. And as restrictions ease, we think the Bank... 6th October 2021 · 3 mins read
Australia & New Zealand Economics Update Australia- Sustained high inflation will prompt rate hikes in 2023 The RBA today stuck to its guns by predicting that rates won't rise until 2024, but our view that inflation will remain higher for longer means it will happen in early-2023 already. 5th October 2021 · 3 mins read
Australia & New Zealand Economics Update Rising household debt will limit scope for rate hikes High and rising household debt in Australia and New Zealand will limit central banks’ scope to hike interest rates. The upshot is that we expect the RBNZ to hike rates by a modest 125bp in the... 23rd September 2021 · 3 mins read
Australia & New Zealand Economics Update Australia- Shipping costs to boost inflation next year Soaring shipping costs will exacerbate the impact of the weaker exchange rate on import price inflation. Indeed, we expect underlying inflation to return into the RBA’s 2-3% target next year. 20th September 2021 · 3 mins read
Australia & New Zealand Economics Update Australia- What to expect from a monetary policy review We doubt that any independent review of Australia’s monetary policy framework would result in a change to the RBA’s 2-3% inflation target. But the Bank could be forced to put more emphasis on house... 15th September 2021 · 4 mins read
Australia & New Zealand Economics Update RBNZ to press ahead with tightening Economic activity in New Zealand took a significant hit as the country was plunged into its strictest level of lockdown in August. But New Zealand’s success at taming the virus means output should... 9th September 2021 · 5 mins read
Australia & New Zealand Economics Update RBA may only hike in 2023 While the RBA pressed ahead with tapering its asset purchases today, the financial markets are too optimistic in pricing in rate hikes as soon as next year. 7th September 2021 · 3 mins read
Australia & New Zealand Economics Update RBNZ may delay hiking until May The recent reimposition of the strictest level of lockdown in New Zealand was enough to prevent the RBNZ from hiking rates in August. And our assumption that restrictions will now remain in place... 20th August 2021 · 4 mins read
Australia & New Zealand Economics Update RBNZ ready to lift rates when restrictions ease The RBNZ sounded hawkish when it left rates on hold today, but the decision demonstrates that the Bank is taking a cautious approach in light of the current lockdown. Assuming restrictions can be... 18th August 2021 · 3 mins read
Australia & New Zealand Economics Update RBA may be too pessimistic about price pressures The Reserve Bank of Australia signalled today that it’s unlikely to reverse the tapering of its bond purchases even as Sydney’s virus outbreak is getting worse. We still expect the tight labour market... 6th August 2021 · 3 mins read
Australia & New Zealand Economics Update Three key points about New Zealand’s labour market While the unemployment rate is now back at its pre-virus low, a range of indicators suggest that there is still some slack in the labour market. We think the unemployment rate may eventually fall to 3... 5th August 2021 · 2 mins read
Australia & New Zealand Economics Update Hawkish RBA to hike rates in early-2023 The Reserve Bank of Australia delivered a hawkish surprise by not delaying the tapering of its bond purchases. And by predicting that it will hit its full employment mandate and make further progress... 3rd August 2021 · 3 mins read