Provisional household spending data published this week suggest that private consumption may have picked up more strongly in Q4 than the Reserve Bank of Australia had anticipated. However, given the patchy track record of the household spending figures, as well as distortions created by end-of-year sales events, we suspect the Board will place more emphasis on the recent run of soft CPI data. Accordingly, we still expect the RBA to begin its easing cycle later this month. Elsewhere, we learnt that wage pressures in New Zealand last quarter were a bit stronger than the RBNZ had expected. But with unit labour cost growth continuing to plunge, we still think there's a compelling case for the Bank to loosen policy aggressively.
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