Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
We doubt that any independent review of Australia’s monetary policy framework would result in a change to the RBA’s 2-3% inflation target. But the Bank could be forced to put more emphasis on house prices, reduce the frequency of Board meetings, and …
15th September 2021
New South Wales poised to reopen in October This week New South Wales (NSW) Premier Gladys Berejiklian laid out her plan for the state to begin to ease Covid-19 restrictions. We already knew that reopening would hinge on 70% of the adult population …
10th September 2021
Economic activity in New Zealand took a significant hit as the country was plunged into its strictest level of lockdown in August. But New Zealand’s success at taming the virus means output should return to its pre-Delta path by Q1 and the RBNZ will begin …
9th September 2021
While the RBA pressed ahead with tapering its asset purchases today, the financial markets are too optimistic in pricing in rate hikes as soon as next year . The RBA kept its interest rate targets unchanged at 0.10% as widely anticipated, but the more …
7th September 2021
Delta undefeatable in Australia Victoria joined New South Wales (NSW) in abandoning the zero-Covid strategy this week, declaring the Delta Variant ‘undefeatable’. Even so, the state government opted not to meaningfully ease restrictions. Instead, the …
3rd September 2021
Trade should support growth in Q3 The record trade surplus in July was largely driven by stronger commodity prices which won’t last. But we expect weaker domestic demand to weigh on imports over the coming months which should see trade make a positive …
2nd September 2021
Acceleration in vaccine rollout means lockdowns unlikely to last much longer RBA will probably press ahead with tapering However, Bank unlikely to tighten as early as next year as financial markets expect The health situation in Australia continues to …
1st September 2021
Output to plunge in Q2, but recession unlikely The further rise in GDP in Q2 was broadly in line with the RBA’s expectations and we suspect the Bank will press ahead with tapering its asset purchases this month . The 0.7% q/q rise in output marked a …
Lockdowns weighing on house price growth The drag from the current lockdowns on the housing market won’t last, but we expect house price growth to slow in earnest next year as affordability constraints bite. Across the eight capital cities, house prices …
NSW easing a damb squib Yesterday’s announcement by New South Wales (NSW) that it will ease restrictions for fully vaccinated people was disappointing. Sydney residents in areas under a curfew will be allowed to have a picnic from mid-September, but that …
27th August 2021
Sales will fall further before rebounding The decline in retail sales in July highlights the impact that lockdowns are having on the Australian economy. And with lockdowns spreading and intensifying in August, sales will fall further before they rebound. …
New Zealand has entered a draconian lockdown and new infections continue to rise. The lockdown prompted the RBNZ to refrain from hiking interest rates at its August meeting and financial markets were only pricing in a 50% chance of a rate hike in October …
26th August 2021
Firms still keen to invest when lockdowns ease We estimate that private investment rose by 1.5% q/q in Q2 and firms’ expectations of future capital expenditure suggest firms are still keen to invest when lockdowns ease. Today’s private capital expenditure …
The recent reimposition of the strictest level of lockdown in New Zealand was enough to prevent the RBNZ from hiking rates in August. And our assumption that restrictions will now remain in place until near the end of this year means we now expect the …
20th August 2021
Lockdown upends RBNZ’s plans In contrast to what most had expected, the RBNZ didn’t become the first central bank in an advanced economy to hike interest rates after the pandemic at Wednesday’s meeting. The statement made it clear that the Bank was keen …
Falling unemployment rate should keep RBA on track The further decline in the unemployment rate in July may not last long, but it should be more than enough to convince the RBA to proceed with its plans to taper asset purchases in September. The 2,200 …
19th August 2021
The RBNZ sounded hawkish when it left rates on hold today, but the decision demonstrates that the Bank is taking a cautious approach in light of the current lockdown. Assuming restrictions can be eased before long we still expect the Bank to hike rates to …
18th August 2021
Sluggish wage growth means RBA won’t hike next year The subdued 0.4% q/q rise in the wage price index in Q2 underlines that the tight labour market didn’t generate large cost pressures even before the latest virus restrictions. That increase marked a …
Lockdowns multiply The outbreak of the delta variant in Australia continues to worsen. Daily cases reached a new high in New South Wales (NSW) this week. And the re-emergence of cases in Victoria, Queensland and ACT has forced each state to re-enter …
13th August 2021
The New Zealand economy is now overheating The RBNZ will hike rates by 50 basis points in August OCR may reach 1.50% by the middle of next year The New Zealand economy is clearly overheating and the Bank’s mandates for both inflation and the labour market …
11th August 2021
New Zealand economy running hot New Zealand’s unemployment rate plunged from 4.6% to 4.0% in Q2, matching its pre-virus low. By contrast, the RBNZ had expected the unemployment rate to remain at 4.7% for more than a year. And unlike in Q1, other …
6th August 2021
The Reserve Bank of Australia signalled today that it’s unlikely to reverse the tapering of its bond purchases even as Sydney’s virus outbreak is getting worse. We still expect the tight labour market to deliver stronger wage growth and inflation than the …
Headwind from net trade won’t last much longer Given that most of the rise in exports last quarter was driven by higher commodity prices, net exports probably provided another big drag on GDP growth in Q2 . But we think that won’t last much longer. …
5th August 2021
While the unemployment rate is now back at its pre-virus low, a range of indicators suggest that there is still some slack in the labour market. We think the unemployment rate may eventually fall to 3.5%. However, mounting staff shortages will act as a …
Consumption will decline in Q3 The decent rise in real retail sales last quarter is consistent with a further rise in consumption in Q2. But given the lockdowns in Q3, we expect consumption to decline before long. The 1.8% m/m decline in retail sales …
4th August 2021
Low unemployment rate locks in RBNZ rate hike The decline in the unemployment rate to 4.0% all but confirms our forecast that the RBNZ will hike rates at its August meeting. The 1.0% q/q rise in employment was above the Bloomberg median forecast of a 0.7% …
The Reserve Bank of Australia delivered a hawkish surprise by not delaying the tapering of its bond purchases. And by predicting that it will hit its full employment mandate and make further progress towards its inflation target, it has opened the door …
3rd August 2021
House prices boom not over yet House prices are continuing to surge and forward indicators suggest the upswing has a little further to run. Even so we think house price growth will slow in 2022. Across the eight capital cities, house prices rose by 1.6% …
2nd August 2021
With new virus cases hitting fresh highs this week, Sydney’s lockdown has been extended until end-August and looks set to last for months given the high transmissibility of the Delta variant. Melbourne also briefly re-entered lockdown this month, though …
30th July 2021
GDP to contract, but recession unlikely As new infections in Sydney have hit fresh highs this week, the lockdown there has been extended until end-August. The blanket ban on construction has been lifted, but construction will remain banned in hotspots. …
Sydney lockdown could set back the recovery in employment Bank to delay reduction in bond purchases from $5bn to $4bn to November However, we still expect QE to end in mid-2022, with first rate hike in early-2023 We expect the Reserve Bank of Australia to …
28th July 2021
Inflation will keep surprising to the upside Most of the surge in inflation in Q2 was driven by base effects that will unwind over the next couple of quarters, but we think that inflation will remain stronger than the RBA is anticipating. The 0.8% q/q …
We believe that the slump in net migration is holding back supply more than demand. Unless the government allows net migration to overshoot its pre-virus level for a prolonged period once the border reopens next year, we think that staff shortages will …
27th July 2021
RBA to delay tapering until November With New South Wales today declaring a “national emergency” as virus cases continue to rise, we now expect the Reserve Bank of Australia to reverse the tapering of its bond purchases and leave them unchanged at least …
23rd July 2021
With Sydney tightening its lockdown and the one in Victoria set to be extended, we now expect GDP to shrink by 0.5% q/q in Q3. The vaccine rollout isn’t advanced enough yet to ease the medical situation meaningfully, but it is set to keep accelerating and …
19th July 2021
RBNZ will hike rates next month We forecast at the end of last year that the RBNZ would end its asset purchase scheme by the middle of this year, one year ahead of schedule. While we had expected the Bank to wait until August, the Bank announced this week …
16th July 2021
Strong inflation locks in RBNZ rate hike We had already expected the RBNZ to hike rates in August and the surge in inflation in Q2 only bolsters our confidence in that forecast. Consumer prices in Q1 rose 1.3% q/q, well above the analyst consensus of a …
Overview - Sydney’s lockdown will keep a lid on Australia’s recovery for now, but booming housing markets should support consumer spending and dwellings investment in both countries. We don’t expect labour shortages to ease much when the border opens, so …
15th July 2021
Tight labour market set to lift wage growth before long The labour market continued to tighten in June and while the lockdown in New South Wales may result in some bumps over the next couple of months, we expect wage growth to accelerate soon . The 29,100 …
The RBNZ today sent a hawkish signal by announcing the end of its bond purchases. While we currently expect the Bank to start hiking rates in May next year, the risk is that it will happen earlier . The Bank’s asset purchases have fallen very sharply in …
14th July 2021
With the virus outbreak in New South Wales going from bad to worse we’re pencilling in a marked slowdown in Q3 GDP growth. However, given that deliveries of the Pfizer vaccine have been brought forward and more people are now encouraged to take the …
12th July 2021
RBA starts to taper RBA Governor Phillip Lowe has had a hectic week, with two speeches and the RBA’s July Policy decision. While the Governor reiterated that the RBA still believes policy support is likely to be needed for a long time, the stance of …
9th July 2021
Economic recovery continues to beat RBNZ expectations Bank likely to end QE in the months ahead We expect the RBNZ to hike rates in May next year We doubt the RBNZ will adjust any policy settings when it meets next Wednesday 14 th July. However, as the …
7th July 2021
By tapering its bond purchases and watering down its commitment to keep its policy rate unchanged until 2024, the RBA is paving the way for interest rate hikes in 2023 . The Bank's decision to shift to a flexible form of quantitative easing that doesn't …
6th July 2021
Lockdowns to weigh on retail sales in June Retail sales are sure to decline in June as the impact of the recent lockdowns weighs on household consumption. Even so, the rise in retail sales in May means the risks to our forecast the consumption was …
5th July 2021
Vacancies off the chart The Australian Bureau of Statistics’ measure of job vacancies surged 23.4% in Q2 which means they are now more than 50% above their pre-virus level. Job vacancies are now equivalent to 2.62% of the labour force, far higher than the …
2nd July 2021
Net trade to turn from drag to boost While export values hit a record high in May, this was largely driven by soaring export prices and export volumes probably dropped back. However, we think that the drag from net trade on GDP growth will fade before …
1st July 2021
House prices to continue booming a little longer House prices are continuing to surge and forward indicators suggest the upswing has a little further to run. But we suspect the boom will peter out by the end of the year and prices will decline a little in …
With the more contagious delta variant spreading in Australia, half of the population is now in lockdown. This highlights the Achilles heel of both countries’ virus management: their slow vaccine rollout. Just 8% of New Zealanders and 5% of Australians …
30th June 2021
Bank to move to flexible QE while keeping weekly pace of bond purchases at $5bn RBA expects wage growth to pick up slowly and gradually; we expect a faster rebound We expect the Bank to taper QE in November, with first rate hikes in early-2023 The Reserve …
29th June 2021
