Our Australia and New Zealand Chart Pack has been updated with the latest data and our analysis of recent developments.
Central banks in both Australia and New Zealand are likely to remain in “wait and watch” mode in the near term, given lingering risks to the inflation outlook. However, we think concerns about inflation persistence are overdone, especially with tradables inflation now in freefall. Moreover, with economic activity languishing and unemployment rising, we suspect that rate cuts will be on the table before long. We expect the RBA to start easing policy in Q2, while the RBNZ will probably wait until Q3. That said, looser policy will take time to feed through to the economy, meaning that growth won’t pick up in earnest until 2025.
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