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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
Our ANZ Chart Pack has been updated with the latest data and our analysis of recent developments. The Antipodean central banks will tread different paths on policy over the forecast horizon. With the New Zealand economy in a tailspin and inflation well …
21st November 2024
We expect the Reserve Bank of New Zealand to cut its policy rate by 50bp, to 4.25%, at its meeting next week. With inflation back at target, the labour market loosening rapidly and activity in the doldrums, there continues to be a compelling case for the …
20th November 2024
While we expect the RBNZ to cut interest rates by the most since the GFC over the coming year, housing affordability was never as stretched at the start of an easing cycle as it was at the start of the current one. Accordingly, we only expect house prices …
19th November 2024
RBA still in “wait and watch” mode With the RBA maintaining its neutral stance, we’re sticking to our view that the Bank won’t begin cutting rates before Q2 2025. The minutes of the RBA’s November meeting confirmed that the decision to leaves interest …
A plunge in the average household size kept housing demand strong during the pandemic even as population growth ground to a halt. RBA estimates suggest that the average household size has remained low ever since, but economic forces point to a rebound. …
18th 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
This page has been updated with additional analysis since first publication. Resilient labour market heightens risk that policy easing will be delayed With the labour market still on sturdy ground, there is a growing risk to our forecast that the RBA will …
13th November 2024
This page has been updated with additional analysis since first publication. Slowdown in wage growth has further to run Wage growth eased markedly in Q3, as workers in the awards system received much smaller pay hikes than last year. Although wage growth …
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
The recent weakness in productivity growth is only partly due to a cyclical hangover from the pandemic as it also reflects the structural weakness in investment. With investment growth set to remain mediocre, productivity growth will remain lacklustre …
7th November 2024
This page has been updated with additional analysis since first publication. Rise in joblessness has further to run The modest rise in the unemployment rate last quarter belies the precarity of the jobs market. We still believe the unemployment rate will …
5th November 2024
Although the Reserve Bank of Australia maintained a broadly neutral stance at its meeting today, we still think it will start to lower interest rates as soon as February next year. However, with the labour market remaining resilient and productivity …
RBA will cut rates early next year Although the Reserve Bank of Australia maintained a broadly neutral tone at its meeting today, we still think it start to lower interest rates as soon as February next year. The Bank’s decision to leave rates unchanged …
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
Rate cuts likely to cushion house price slowdown Australia’s housing rally continued to lose steam in October. However, with the RBA set to cut interest rates from early-2025, there are good reasons not to be too bearish on the outlook for house price …
31st October 2024
This page has been updated with additional analysis since first publication. Australian consumer not out of the woods yet Although real retail sales saw a healthy pickup in Q3, there are reasons to suspect the data are overstating the momentum behind …
RBA to remain even-handed about inflation risks Although labour market is still tight, activity remains weak Bank should be able to start unwinding monetary restriction from Q1 The Reserve Bank of Australia is all but certain to leave rates unchanged at …
30th October 2024
RBA still on course to cut rates in Q1 2025 Today’s CPI release suggests that underlying inflation will be within striking distance of the RBA’s 2-3% target range by year-end. That should pave the way for the Bank to begin easing policy at its meeting …
29th October 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
Australia is exceptional. Monetary easing cycles may be in full swing in many advanced economies, but the Reserve Bank shows no appetite to cut rates yet. Even though headline and core inflation are cooling, the labour market remains too tight for comfort …
22nd 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
This page has been updated with additional analysis since first publication. RBA to focus on inflation fight as labour market remains robust With the labour market running red hot, the Reserve Bank of Australia won’t cut rates before the first half of …
17th October 2024
This page has been updated with additional analysis since first publication. Soft inflation data tee up another 50bp cut by the RBNZ The weaker-than-expected Q3 CPI data reinforce our conviction that the RBNZ will loosen policy more aggressively than most …
15th 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
RBNZ hands down a dovish 50bp cut The RBNZ is likely to hand down a couple more 50bp rate cuts over the next few months . And we think it will end up cutting rates more aggressively than most are predicting. The RBNZ’s decision to cut its Official Cash …
9th October 2024
With the price of crude oil continuing to climb higher, we could soon see a resurgence in fuel inflation in both Australia and New Zealand. However, if we’re right that any pickup in oil prices will prove short-lived and that second-round effects will be …
8th October 2024
RBA softens its tightening bias Although the RBA is becoming more attuned to downside risks to its outlook, we still think it will wait until early next year to cut rates. The minutes of the RBA’s September meeting confirmed that the RBA has in fact …
Our new House Price Leading Index combines several leading indicators that capture the balance of supply and demand in Australia’s housing market and suggests that house price growth will continue to slow over the coming months. We’ve been tracking a wide …
7th 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
The federal budget foresees an unusually large jump in cash outflows that don’t feed into the underlying cash balance in 2024/25. However, the actual boost to activity will be much smaller than the budget suggests and it will have run its course in …
3rd October 2024
We expect the RBNZ to move its easing cycle up a gear and cut the Official Cash Rate by 50bp at its meeting next week. What’s more, given the Bank’s tendency to loosen policy aggressively, we think the policy rate will eventually be slashed to 2.25%, …
2nd October 2024
This page has been updated with additional analysis since first publication. Consumer rebound not as strong as it seems The solid pickup in retail sales in August was driven in part by temporary factors, meaning that the underlying momentum behind …
1st October 2024
Slowdown in house-price growth has further to run With new listings rising rapidly, the housing market is shifting in favour of buyers. Accordingly, we think house price growth will ease further in the months ahead. Allowing for seasonal swings, house …
While banks have issued more housing loans that don’t meet APRA’s serviceability guidelines over the last couple of years, we aren’t convinced that this poses significant risks to financial stability. The Australian Prudential Regulation Authority’s …
30th September 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
Overview – A tight labour market and elevated public demand will keep the RBA from loosening policy before early-2025. Moreover, we expect the forthcoming easing cycle to be short-lived by past standards. By contrast, the more pressing need to stem the …
25th September 2024
This page has been updated with additional analysis since first publication. Disinflation gathers pace The Reserve Bank of Australia will look past the sharp fall in headline inflation in August, given that the plunge was driven in large part government …
The RBA didn’t discuss a rate hike at today’s meeting for the first time since March but reiterated its pledge that it won’t cut interest rates “in the near-term”. While the risks are starting to tilt towards an earlier rate cut, we’re sticking to our …
24th September 2024
RBA will only cut in first half of next year The RBA sounded marginally less hawkish today but we still expect the Bank to only lower interest rates in Q2 2025. As widely anticipated, the Bank kept its policy rate unchanged at 4.35%. The key elements of …
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
Unemployment rate will approach 5% next year The labour market and population data released today are consistent with our view that the Reserve Bank of Australia will only lower interest rates in Q2 2025. For a start, the 47,500 rise in employment in …
19th September 2024
This page has been updated with additional analysis since first publication. RBNZ still on course to loosen policy aggressively Economic activity in New Zealand last quarter wasn’t quite as weak as most had anticipated. However, we still think there’s a …
18th September 2024
Even though state and federal budgets point to a sharp slowdown in public demand in 2024/25, our analysis suggests that the public sector will keep providing a sizeable boost to GDP growth. And if we’re right that private demand will pick up as real …
Limited data flow since August meeting broadly in line with RBA’s expectations Bank will therefore reiterate pledge to keep rates unchanged this year First rate cut will happen in Q2 next year The Reserve Bank of Australia will probably stick to its …
17th 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
The Reserve Bank of New Zealand has always ended up cutting interest rates by more than it anticipated at the start of previous easing cycles. We think this time won’t be any different and expect the Bank to cut rates to 2.25% at the end of its easing …
10th 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
Australian economy will soon turn a corner Although activity likely bottomed out last quarter, the ongoing weakness in private demand raises the risk that the RBA will cut rates sooner rather than later. The 0.2% q/q rise in real GDP last quarter was a …
4th September 2024
