Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
Australian house price growth remained soft in March, amid still-weak housing demand. Although the RBA’s easing cycle could help deliver a shift in momentum later this year, stretched affordability is likely to constrain the strength of the rebound. Much …
1st April 2025
RBA will cut two more times this year Australian Prime Minister Anthony Albanese confirmed today that the next general election will be held on 3 rd May. The announcement comes closely on the heels of the government’s 2025/26 Budget , which includes an …
28th March 2025
Foreign student arrivals not a gamechanger Yesterday the ABS published data showing that Australia’s population growth slowed from 2% y/y in Q2 to 1.8% y/y in Q3. That slowdown was driven primarily by easing net overseas migration: on a 12-month basis, …
21st March 2025
Budget deficit not widening as much as feared Treasurer Jim Chalmers will hand down the 2025/26 Budget on 25 th March and he will be eager to share the good news that the budget deficit in 2024/25 will be smaller than the Treasury had predicted in the …
14th March 2025
RBA won't provide much interest rate relief The minutes of the RBA’s February meeting confirmed that the Bank’s decision to cut rates last month had come down to the wire. Moreover, with concerns still persisting about lingering inflation risks, the Board …
7th March 2025
Soft data belie lingering capacity pressures At first glance, data released this week should give the Reserve Bank of Australia greater confidence that it has brought inflation under control. To start with, the ABS’ Monthly CPI indicator showed that both …
28th February 2025
Risks are tilting towards less easing As most had expected, the Reserve Bank of Australia began its easing cycle with a 25bp cut this Tuesday. However, in her post-meeting press conference Governor Bullock took pains to rein in expectations for further …
21st February 2025
Tax cuts could kickstart the recovery With the New Zealand economy plainly in dire straits , the government is reportedly considering slashing the corporate income tax (CIT) rate in the upcoming May budget. There is certainly a compelling case for the …
14th February 2025
Pickup in consumption won't nix RBA rate cut Data released this week suggest that the Australian consumer felt rather upbeat last quarter. To start with, we learnt that retail sales held steady in December, a better result than most had anticipated. As a …
7th February 2025
We still expect a shallow easing cycle Over the past few weeks, we’ve been flagging the risk that the Reserve Bank of Australia would loosen policy settings sooner rather than later. With CPI data released this week surprising materially to the downside, …
31st January 2025
Case for RBNZ to ease aggressively remains intact With data released this week showing that inflation in New Zealand remained subdued last quarter, it’s all but certain that the RBNZ will cut rates by another 50bp, to 3.75%, at its meeting next month. …
24th January 2025
Upcoming inflation data will be pivotal Data released this week broadly support our view that the Reserve Bank of Australia won’t be in a rush to start cutting rates. Indeed, yesterday’s blockbuster jobs report only adds to the evidence that the …
17th January 2025
Tight labour market muddies the waters Financial markets are becoming increasingly optimistic that the RBA’s next easing cycle is right around the corner. They are now pricing in a 70% chance that the Bank will hand down a 25bp cut at its meeting in …
10th January 2025
RBA shake up The week began with Australian Treasurer Jim Chalmers announcing two new picks for the RBA’s monetary policy committee. To recap, in late November, parliament approved an overhaul of the RBA, in line with the recommendations of a review …
20th December 2024
Tight labour market will muddy the waters Although the Reserve Bank of Australia predictably left rates on hold at its meeting on Tuesday, the Board didn’t exactly try to hide the fact that it was in a more dovish mood. Indeed, the Bank stated that it was …
13th December 2024
Bank will remain patient Following the release of disappointing Q3 GDP figures this Wednesday, financial markets have started to bring forward their expectations for rate cuts by the Reserve Bank of Australia. (See Chart 1.) They now see a three in four …
6th December 2024
Markets remain unmoved by inflation The RBNZ slashed rates by another 50bp at its meeting on Wednesday, taking its policy rate below that of the RBA for the first time since 2013. By contrast, the Australian CPI released this week dashed any remaining …
29th November 2024
Student numbers set to fall regardless The minutes of the November RBA meeting were rather hawkish. The Bank noted that even if inflation weakened more sharply than expected, it would “need to observe more than one good quarterly inflation outcome to be …
22nd November 2024
RBA to stay vigilant for a bit longer At her post-meeting press conference last week, RBA Governor Bullock cited the tightness of the Australian labour market as a key reason why the Board remains reluctant to shift to an easing bias. Those remarks seem …
15th November 2024
RBA need not fret geopolitical risks The RBA’s meeting this week came and went without much ado, with the Bank leaving rates on hold yet again and providing little in terms of new forward guidance. In fact, the RBA’s meeting was quickly overshadowed by …
8th November 2024
Elevated services inflation not a deal breaker Markets have continued to dial back expectations for policy loosening by the RBA following the release of Q3 CPI data this Wednesday. They are now fully pricing in a rate cut only by May, whereas they were …
1st November 2024
Inflation concerns appear misplaced At an event organised by the Peterson Institute this week, RBNZ Governor Adrian Orr suggested that the Bank was likely to be more circumspect about loosening policy going forward. The Governor argued that it was …
25th October 2024
Firms will take higher labour costs on the chin With the Australian labour market remaining resilient as ever, financial markets have come around to our view that the Reserve Bank of Australia won’t cut interest rates before Q1 2025. That’s a notable …
18th October 2024
Easing monetary restraint is the need of the hour As was widely anticipated, the Reserve Bank of New Zealand cut its Official Cash Rate by 50bp at its meeting on Wednesday. But it’s worth noting that the Committee sounded rather dovish. In contrast to …
11th October 2024
A potential blow to property investors The headlines continue to be dominated by reports that the Australian government is considering paring back existing housing tax concessions. On Monday, Treasurer Jim Chalmers confirmed that he did ask his department …
4th October 2024
Cuts still won't come as soon as markets expect As expected, the RBA left rates unchanged at its meeting this Tuesday. Reading between the lines, however, the Bank does appear to have toned down its hawkish bias somewhat. Indeed, it’s worth noting that …
27th September 2024
O labour market slack, where art thou? In the wake of the Fed’s hawkish 50bp cut and another set of strong Australian labour market data , the financial markets now see a lower 60% chance of an RBA rate cut by the end of the year, down from 85% when we …
20th September 2024
The public sector isn’t the main game In a speech this week, RBA Assistant Governor Sarah Hunter reiterated the Bank’s view that conditions in the labour market are currently not conducive to “wages growing at a rate consistent with achieving the …
13th September 2024
RBA will need to see more progress on inflation National accounts data released this Wednesday made for grim reading. They confirmed that Australia’s run of sluggish activity continued in Q2, with real GDP rising by a tepid 0.2% q/q for a third …
6th September 2024
A solution in search of a problem The Australian government’s migration policy is in the spotlight once again as the Senate deliberates over legislation aimed at capping international student commencements in the country. The proposal put forward by …
30th August 2024
Restrictive policy will do its job Earlier this week the Reserve Bank of Australia published the minutes of its August meeting, which showed that the Board remains concerned about upside inflation risks. In particular, the Bank noted that there was likely …
23rd August 2024
Downside risks abound in New Zealand Our non-consensus call that the RBNZ would start normalising policy this week came to fruition, with the Bank handing down its first rate cut in over four years. But while the Committee reached a full consensus that it …
16th August 2024
No rush to loosen policy Although the Reserve Bank of Australia left rates on hold at its meeting this Tuesday, its messaging was unequivocally hawkish. In her post-meeting press conference Governor Michele Bullock stated that the Board had seriously …
8th August 2024
RBA will remain data dependent The main event this week was the publication of Australian CPI data , which showed that underlying inflation in Q2 was softer than most had anticipated. To be clear, trimmed mean inflation was only 0.1%-pt lower than the …
2nd August 2024
Case for RBNZ to ease strengthens According to a new survey released by Retail NZ this week, things are going from bad to worse for the domestic retail industry. Indeed, more than two-thirds of retailers reported that they had failed to meet their sales …
26th July 2024
A policy pivot is imminent If the RBNZ had any doubts that it had broken the back of inflation, they will have been quashed by the slew of weaker-than-expected data releases this week. Accordingly, we’re bringing forward our forecast for the Bank’s first …
19th July 2024
RBA will be content to play the waiting game Financial markets have increasingly been paring back their interest rate expectations for the RBA. They are now pricing in a roughly 20% chance that the Bank will hike rates by 25bp this year, down sharply from …
12th July 2024
A strong case for an August hold The minutes of the RBA’s June meeting revealed that the Board hasn’t yet shut the door on another rate hike. In our view, the Bank’s tightening bias is not unwarranted. After all, data published this week showed that …
5th July 2024
A narrower path The release of hotter-than-expected CPI data this Wednesday sent shockwaves through financial markets. Indeed, investors are now pricing in a nearly 40% chance of 25bp rate hike by year-end, whereas at the start of the week they thought …
28th June 2024
Supply constraints are easing Some commentators have been arguing that it’s not weak demand but a shortage of supply that’s keeping GDP growth at 1% y/y. After all, the fact that job vacancies are still very high and employment growth remains very strong …
21st June 2024
Underlying price pressures will abate only slowly When Queensland Treasurer Cameron Dick unveiled the state government’s 2024/25 Budget, he made no pretence about his desire to prime the pump in the run the up to local elections in October. The Budget …
14th June 2024
GDP growth set to undershoot RBA’s forecasts Australia last quarter recorded the weakest annual GDP growth since the early-1990s recession, leaving aside the pandemic. If the measly 0.1% q/q rise in output last quarter was repeated this quarter, annual …
7th June 2024
Disinflation stalling The economic data released this week once again highlighted the dilemma the Reserve Bank of Australia finds itself in. On the one hand, the April Monthly CPI Indicator showed the second consecutive rise in both headline and trimmed …
31st May 2024
Households seem keen on saving more The minutes of the RBA’s May meeting confirmed that the Bank discussed a rate hike in response to the upside surprises in inflation and the labour market, but ultimately decided against it. One reason was that the …
24th May 2024
Budget leaves much to be desired The headlines this week were dominated entirely by the contentious 2024/25 Federal Budget , which some commentators have described as “smoke and mirrors”. We certainly sympathise with those who take umbrage at Treasurer …
17th May 2024
A tricky balancing act At its meeting this Tuesday, the Reserve Bank of Australia continued to leave rates on hold, contrary to our expectations that the Bank would feel compelled to take out some additional insurance in the form of a 25bp hike. To be …
10th May 2024
RBNZ caught between a rock and a hard place We learnt this week that New Zealand’s labour market deteriorated further last quarter. On the back of unexpected job shedding, the unemployment rate rose from 4.0% to 4.3% in Q1, above the RBNZ’s forecast of …
3rd May 2024
The last mile will be the hardest The release of Australia’s quarterly CPI data this Wednesday made for grim reading. With price pressures proving more stubborn than most had anticipated, markets have now given up any hopes that the RBA will cut rates …
26th April 2024
RBNZ to watch and wait for longer On Wednesday we learnt that inflation in New Zealand moderated from 4.7% in Q4 to 4.0% in Q1. At first glance, that outturn was only a touch stronger than the 3.8% the RBNZ had predicted. However, the details of the CPI …
19th April 2024
Markets fret inflation risks The RBNZ’s meeting this Wednesday went by without much ado, with the Bank leaving rates unchanged as everyone had expected. If anything, the Committee sounded a touch dovish, as it no longer mentioned its limited tolerance for …
12th April 2024
