Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
Much of the recent resilience in Australia’s house price growth can be attributed to a handful of capital cities where the property markets have gone from strength to strength. We believe that there are a number of factors that help explain the divergence …
23rd 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
This page has been updated with additional analysis since first publication. A loosening labour market should forestall further rate hikes Although job growth remained healthy last month, it didn’t prevent the unemployment rate from rising anew. And we …
18th July 2024
This page has been updated with additional analysis since first publication. With inflation falling rapidly, the RBNZ’s August meeting is now “live” Today’s CPI release confirms that inflation is all but certain to return to the RBNZ’s 1-3% target by Q3. …
17th July 2024
The latest data indicate that capacity pressures have continued to ease, a trend that should continue over the coming quarters. However, it will be a while before policymakers can be confident that they have broken the back of inflation. Accordingly, we …
15th 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
RBNZ strikes some dovish notes Although it left the Official Cash Rate unchanged at 5.50%, the RBNZ sounded rather dovish in its commentary. The Committee’s messaging gives us greater confidence that the Bank will commence its easing cycle in November. …
10th July 2024
The Monthly Household Spending Indicator is often revised several months later so the plunge in spending in May won’t deter the Reserve Bank of Australia from hiking rates next month if inflation remains hot. According to the Monthly Household Spending …
8th 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
We expect the RBNZ to leave rates on hold for a seventh consecutive time at its meeting next Wednesday. To be sure, the Bank will probably strike a hawkish tone out of an abundance of caution. However, with the economy in tatters and inflation on its way …
3rd July 2024
This page has been updated with additional analysis since first publication. Uptick in retail sales not a gamechanger for the RBA The upside surprise in the May retail sales numbers primarily reflected consumers taking advantage of end-of-financial year …
Concerns about the economy will keep RBA from hiking The minutes of the RBA’s June meeting revealed that the Bank’s tightening bias remains intact. The Board noted that there were a number of factors that supported the case for a rate hike last month. …
2nd July 2024
Housing market will cool in earnest Australian house price gains softened just a smidge in June as housing demand held up reasonably well. However, as strained affordability takes its toll, we still think that house price growth will ease markedly in the …
1st 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
While the labour market held up initially as job vacancies started to fall, fewer job openings are now pushing up the unemployment rate in earnest and we expect it to rise from 4% now to 5% by 2026. According to data released by the Australian Bureau of …
27th June 2024
Overview – Activity has slowed to a standstill in both countries. Although output growth should gather momentum going forward, it will remain below its pre-pandemic average. However, with underlying inflation still running well above target, central banks …
26th June 2024
RBA will take upside surprise in inflation in its stride The jump in inflation in May means that the Reserve Bank of Australia will be debating interest rate hikes for a while yet, but with the economy doing worse than it has been anticipating, we still …
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
This page has been updated with additional analysis since first publication. Economy struggles to gain momentum The modest rebound in GDP last quarter doesn’t change the bigger picture that the New Zealand economy is worse for wear. In fact, timely survey …
20th June 2024
The RBA discussed another rate hike at today’s meeting and an upside surprise to Q2 inflation could force its hand at its August meeting. However, with capacity constraints easing and government rebates pushing inflation into the Bank’s target band by Q3, …
18th June 2024
RBA’s next move will be a cut but only next year The RBA probably debated another rate hike at today’s meeting and we only expect the Bank to start easing policy next year. The Bank’s decision to keep interest rates unchanged today was correctly …
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
This page has been updated with additional analysis since first publication. Although the unemployment rate fell anew in May, leading indicators continued to point to a marked rise in the months ahead. All told, the data suggest that the RBA will remain …
13th June 2024
RBA to stay put at its June meeting Inflation remains high, but spare capacity is starting to open up in the economy Forthcoming easing cycle will be modest in scope, with rates returning to neutral We expect the Reserve Bank of Australia to leave rates …
11th 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
GDP growth will accelerate over the second half of the year While GDP growth slowed to a crawl in Q1, a rebound in real household incomes should contribute to a pick-up in activity over the second half of the year. The 0.1% q/q rise in Q1 GDP was a …
5th June 2024
This year’s minimum wage increase will be a bit smaller than we had anticipated. And with the looser labour market putting downward pressure on wage growth among workers not covered by the minimum wage and awards, we expect wage growth to slow faster than …
3rd June 2024
While house price growth accelerated rather sharply in May, stretched affordability points to a renewed slowdown. Indeed, most leading indicators point to a renewed moderation in price growth. Allowing for seasonal swings, house price growth across the …
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
Stalling disinflation means rates will remain higher for longer While inflation picked up further in April, we doubt that the Reserve Bank of Australia will respond with another interest rate hike. The 3.6% increase in the Monthly CPI Indicator was …
29th May 2024
The debt-to-income restrictions launched by the Reserve Bank of New Zealand today won’t restrict the flow of new mortgage lending. In fact, the concurrent easing of restrictions on loan-to-value restrictions will result in slightly looser lending …
28th May 2024
Labor’s regulatory push can’t be blamed for the recent slump in labour productivity and we aren’t convinced that it will hold back future productivity growth much either. Indeed, we still think that a boost from artificial intelligence will lift growth …
Falling real consumption will help to reduce inflation The weakness in retail sales is consistent with our view that inflation will reach the top end of the RBA’s 2-3% target band in the second half of the year. The 0.1% m/m rise in retail sales values in …
We think the kiwi and the aussie strength will continue over the next couple of years as we expect they will be among the last developed economies to start an easing cycle. The aussie and the kiwi have been among the best performing G10 currencies since …
24th 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 …
Although it left rates unchanged at its meeting today, the RBNZ indicated that interest rates may have to stay higher for longer. However, we think the Bank is overstating the upside risks to the inflation outlook. Accordingly, we still think there’s a …
22nd May 2024
RBNZ signals rate cuts may have to wait Although the RBNZ suggested that there was a high bar for further policy tightening, the Committee stated that interest rates may have to remain at their current restrictive level well into 2025. In our view, the …
RBA is done tightening policy The RBA continued to tout the line that all options are on the table as far as its next move is concerned. However, we still expect the Bank’s next move to be down, not up. The minutes of the RBA’s May meeting confirmed that …
21st 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
Labour market will continue to loosen The continued rise in the unemployment rate in April further diminishes the likelihood that the Reserve Bank of Australia will deliver another interest rate hike. The 38,500 rise in employment last month was stronger …
16th May 2024
This note answers some of the most frequently asked questions that we received from clients during a recent online briefing about the latest US tariffs on China. Watch the original briefing here . What has been announced? Yesterday was the end of a …
15th May 2024
This interactive dashboard allows you to explore all of our forecasts and key data for Australia and New Zealand. If you have subscriber access to the data underlying this redesigned dashboard, you can download it via the menu options in the top right of …
Treasurer Jim Chalmers has sought to present the 2024/25 Budget as one that strikes a balance between providing support to an ailing economy and keeping pressure off inflation. In our view, that’s disingenuous: the combination of increased government …
We are resending this publication to correct an error in the second paragraph. Slowdown in wage growth means RBA won’t hike any more Wages growth is easing more rapidly than the RBA had anticipated. While this will forestall any further policy tightening, …
We expect the RBNZ to leave policy settings unchanged at its meeting next week. Although the domestic economic backdrop is clearly weak, lingering risks around inflation persistence means policy loosening is unlikely to come onto the agenda before Q4. …
14th May 2024
The blowout in the pipeline of unfinished houses during the pandemic will reverse by the end of this year. With building approvals very low, dwellings investment will therefore fall further. While this will only exacerbate the acute shortage of rental …
13th 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
All signs are that unit labour cost growth in New Zealand will plummet in the coming quarters. Coupled with subdued domestic demand, that should feed through to lower non-tradables inflation in short order. The upshot is that the RBNZ’s forthcoming easing …
9th May 2024
The RBA’s decision to leave rates on hold at its meeting today suggests that there is a high bar for any further tightening of monetary policy. Indeed, the Board seems keen on minimising the collateral damage to the economy from its war on inflation. On …
7th May 2024
