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RBNZ will hike rates above 5.0% The Reserve Bank of New Zealand hiked the overnight cash rate by 75bp as most had anticipated and it now seems likely that rates will peak closer to 5.5% instead of our current forecast of 5.0%. The statement was very …
23rd November 2022
Even though wage growth surpassed 3% for the first time since 2012 last quarter, and unemployment is back at a record low , the tight labour market has not been a major driver of the recent surge in inflation. In contrast to the US or New Zealand, wage …
18th November 2022
Unemployment rate to rise sharply next year Australia’s labour market held up well in October, consistent with our expectations for a near-term acceleration in wage growth and a further 100bps of rate hikes by the RBA. But we think employment will start …
17th November 2022
Broad-based strength in labour market and inflation to prompt 75bp hike next week Rates to peak at 5.0% by April With inflation set to drop back, RBNZ will cut rates in late-2023 With the labour market and inflation going from strength to strength and …
16th November 2022
Wage growth will peak at 3.5% by mid-2023 Wage growth climbed above 3% in Q3 for the first time since 2013 and we expect it to climb further to 3.5% by the middle of next year. The 1.0% q/q rise in hourly wages excluding bonuses was above the analyst …
Savings rate fell below pre-virus level in Q3 Comments by RBA Deputy Governor Bullock suggest that the risks to our above-consensus policy rate forecasts are shifting to the downside. Bullock noted today that the Bank is getting closer to the point where …
11th November 2022
The proposed price caps on thermal coal and natural gas would knock off around one to 1.25%-pts from overall inflation though the full impact would only materialise in the second half of next year. Wholesale gas and thermal coal prices have surged in …
8th November 2022
With inflation surprising to the upside in Q3, the Reserve Bank of Australia was forced to revise up its near-term forecasts for inflation in its latest Statement on Monetary Policy. (See Chart 1.) What’s more, the Bank’s forecasts were based on the …
7th November 2022
RBA increasingly worried about wage-price spiral The Reserve Bank of Australia lifted the cash rate by 25bp on Tuesday as we and most other analysts had anticipated and the marked upward revision to its inflation forecasts support our view that the Bank …
4th November 2022
Rebound in trade surplus won’t prevent drag from net trade in Q3 While the trade surplus bounced back in September, we’ve pencilled in a drag from net trade to Q3 GDP growth as export volumes probably didn’t rise fast enough to offset a surge in imports. …
3rd November 2022
Rebound in trade surplus won’t prevent drag from net trade While the trade surplus bounced back in September, we’ve pencilled in a drag from net trade to Q3 GDP growth. The rebound in the trade balance, from $8.7bn to $12.4bn in September, was well above …
Labour market strength adds to case for 75bp hike New Zealand’s labour market remained very tight last quarter and coupled with the continued strength in inflation. the RBNZ will probably hike by 75bp in a couple of weeks. The 1.3% q/q rise in employment …
1st November 2022
Labour market strength will encourage RBNZ to hike by 75bp this month New Zealand’s labour market remained very tight last quarter and coupled with the continued strength in inflation. the RBNZ will probably hike by 75bp in a couple of weeks. The 1.3% q/q …
The Reserve Bank of Australia hiked rates by 25bp today and the upward revision to its inflation forecasts are consistent with our view that rates will peak at an above-consensus 3.85%. However, we still see a good chance that policy will be loosened …
RBA will lift rates more sharply than most anticipate The Reserve Bank of Australia hiked rates by 25bp today and the upward revision to its inflation forecasts are consistent with our view that rates will peak at an above-consensus 3.85%. The Bank’s …
Largest price declines behind us but housing downturn not over yet The worst of the housing downturn is probably behind us but we still expect prices to fall by another 10% following the 1.1% m/m drop in October. While the 1.1% m/m drop in house prices …
Sales volumes running out of steam While retail sales kept rising for the ninth consecutive month in September, growth in volumes is slowing sharply and will remain subdued over coming quarters as real incomes fall and the savings rate returns to normal …
31st October 2022
Retail sales will come off the boil before long While retail sales kept rising for the ninth consecutive month in September, growth in volumes is slowing sharply and will remain subdued over coming quarters as real incomes fall and the savings rate …
Bank won’t make an about-face The stronger than expected Q3 inflation print has prompted some commentators to forecast a larger 50bp rate hike at next week’s RBA meeting following the step down from the four 50bp hikes in recent months to a smaller 25bp …
28th October 2022
Bank won’t make a U-turn and will opt for another 25bp hike next week But the upside surprise in Q3 inflation points to a higher peak in interest rates With GDP growth slowing sharply next year, we still expect rate cuts from late-2023 While the …
26th October 2022
Inflation will approach 8% by year-end Inflation was stronger than expected last quarter and will rise further in Q4. That’s consistent with our forecast that the Reserve Bank of Australia will hike rates more aggressively than most anticipate. The 1.8% …
Inflation hasn’t peaked yet The stronger-than-expected rise in consumer prices in Q3 is consistent with our forecast that the Reserve Bank of Australia will hike rates more aggressively than most anticipate. The 1.8% q/q increase in consumer prices last …
The Treasurer resisted the temptation to spend the tax windfall from high commodity prices in today’s Budget. But with high inflation lifting payments by at least as much as receipts, the government now expects a larger structural deficit. The resulting …
25th October 2022
Minutes signal RBA not done yet The RBA this week signalled that even though it slowed the pace of tightening at its last meeting, it is not done yet. In a speech on Wednesday, Deputy Governor Bullock showed that the higher frequency of the RBA’s policy …
21st October 2022
Economists from our ANZ and Global Markets teams were online shortly after the release of Q3 CPI data for a 20-minute briefing in which they answered client questions and addressed key issues, including: Whether higher interest rates will push the …
20th October 2022
The continued strength in inflation will encourage the Reserve Bank of New Zealand to hike the overnight cash rate by 75bp in November and to 5.0% by mid-2023. And with the financial markets sharply repricing the peak in the cash rate, a further surge …
Unemployment rate will remain low for now Australia’s labour market is starting to sputter but with unemployment set to remain low, the RBA will continue to hike interest rates. The number of employed people rose by just 900 last month, well below the …
Strong inflation will prompt further rapid tightening The much stronger than expected rise in consumer prices in Q3 will encourage the Reserve Bank of New Zealand to hike rates by another 50bp at its November meeting and poses upside risks to our view …
17th October 2022
Strong inflation will prompt further rapid hikes The much stronger than expected rise in consumer prices in Q3 will encourage the Reserve Bank of New Zealand to hike rates by another 50bp at its November meeting and poses upside risks to our view that it …
Australia’s record housing downturn may not result in dwellings investment falling quite as sharply as we’re anticipating. However, the largest wealth destruction in Australia’s modern history poses downside risks to our forecast of a 2.5% rise in …
RBA flags higher neutral interest rate (sort of) This week’s speech by Reserve Bank of Australia Assistant Governor Luci Ellis on the neutral interest rate was an odd affair. The last time the Bank published an estimate of the neutral rate was in 2017, …
14th October 2022
We expect the aussie and the kiwi to weaken further against the US dollar and trough around mid-2023. And while we don’t expect the aussie to outperform the kiwi as it has recently, we think it will largely cling on to its recent gains and expect the …
12th October 2022
Overview – Soaring interest rates and falling real incomes will result in a more pronounced slowdown in economic activity in both countries than most anticipate. In fact, we now expect New Zealand to enter a recession next year as the RBNZ will hike …
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
Bank not done tightening yet Following the RBA’s surprise decision to hike the cash rate by 25bp instead of the 50bp widely anticipated, the financial markets now price in a peak of 3.6% by mid-2023 instead of 4.2% just before the meeting. Some …
7th October 2022
Export revenue will fall further The further fall in the trade surplus in August largely reflects a plunge in export prices and net trade should still provide a small boost to Q3 GDP. But with commodity prices now clearly down from their peak, export …
6th October 2022
The Reserve Bank of New Zealand hiked the overnight cash rate by 50bp to 3.5% as widely anticipated and the hawkish tone of the statement is consistent with our forecast that rates will peak at 4.5% by mid-2023. However, that aggressive tightening will …
5th October 2022
RBNZ will hike all the way to 4.5% The Reserve Bank of New Zealand hiked the overnight cash rate by 50bp to 3.5% as widely anticipated and the hawkish tone of the statement is consistent with our forecast that rates will peak at 4.5% by mid-2023. For a …
The Reserve Bank of Australia slowed the pace of monetary tightening by delivering a smaller 25bp rate hike to 2.60% this month, but we still expect rates to peak a touch higher than most anticipate. And the financial markets are now coming round to our …
4th October 2022
Rates may peak at 3.6% by early-2023 The Reserve Bank of Australia slowed the pace of monetary tightening by delivering a smaller 25bp rate hike this month, but we still expect rates to peak a touch higher than most anticipate. The Bank’s decision to slow …
Worsening affordability weighing on housing market Australia’s house prices have now fallen by 5% since the start of the current downturn and rapidly worsening affordability suggests they will fall by another 10%. The 1.4% m/m drop in house prices across …
3rd October 2022
Budget deficit will continue to narrow The Treasurer confirmed this week that the deficit in the underlying cash balance in 2021/22 narrowed to just 1.4% of GDP instead of the 3.5% predicted in the March budget, which was the largest forecast miss …
30th September 2022
To early to declare victory on inflation The inaugural release of Australia’s Monthly CPI Indicator showed that inflation eased a bit in August, though we still expect it to approach 8% in Q4. Meanwhile, the first drop in job vacancies since last year’s …
29th September 2022
Inflation hasn’t peaked yet The inaugural release of Australia’s Monthly CPI Indicator showed that inflation eased a bit in August, though we still expect a surge in utilities prices to lift inflation closer to 8% this quarter. The Australian Bureau of …
Resilient activity and faster food inflation point to another 50bp hike next week Inflation set to remain stubbornly high We now expect rates to peak at 4.5% by April 2023; first rate cut only by end-2023 With GDP growth holding up and food inflation …
28th September 2022
Resilience in consumption will prompt RBA to keep tightening aggressively The eight consecutive rise in retail sales in August will convince the RBA to hike rates by another 50bp at next week’s meeting. And with the savings rate still well above pre-virus …
Resilience in consumption will encourage RBA to continue tightening aggressively The eight consecutive rise in retail sales in August will convince the RBA to hike rates by another 50bp at next week’s meeting. The 0.6% m/m increase in retail sales values …
Early signs that tighter policy is working but RBA will hike by 50bp next week Consensus catching up to our long-held view that rates will reach 3.6% Absence of wage-price spiral means RBA will be able to loosen policy next year Other analysts are …
27th September 2022
Aussie falls to our year-end forecast With the Fed delivering a hawkish 75bp rate hike by signalling that it will continue tightening aggressively, the Australian dollar has slumped to US$0.66, on par with our end-year forecast. The exchange rate …
23rd September 2022
