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This page has been updated with additional analysis since first publication. Stronger-than-expected GDP growth won’t prompt RBA to resume rate hikes While GDP growth held up better last quarter than the RBA had anticipated, we doubt this will encourage …
6th September 2023
The RBA retained its tightening bias when it kept interest rates unchanged at 4.10% today. However, we think the Bank’s next move will be a rate cut, perhaps as early as the first quarter of next year . The Bank’s decision to keep the cash rate unchanged …
5th September 2023
RBA is done tightening and will cut rates earlier than most expect The RBA retained its tightening bias when it kept interest rates unchanged at 4.10%, but we think the Bank’s next move will be a rate cut, perhaps as early as the first quarter of next …
The cyclically-sensitive antipodean currencies have had a tough year so far, and a fair bit of bad news already appears priced in to both the aussie and the kiwi. Nonetheless, we don’t think their recent rebound will prove the start of a sustained …
1st September 2023
Housing recovery remains in high gear Australian house prices rose at a blistering pace in August, as demand continued to outstrip supply. Although the property market is likely to remain tight in the near term, we think house price growth will moderate …
Australia’s energy-sector woes On Monday, union representatives at Chevron’s Gorgon and Wheatstone LNG plants announced their intention to take industrial action starting September 7 th . A union document suggests that members will engage in rolling work …
31st August 2023
This page has been updated with additional analysis since first publication. Resilience of business investment poses upside risks to growth We don’t think the ongoing strength in private fixed investment will last. However, the balance of risks to our …
Rapid fall in inflation and weaker-than-expected wage growth mean RBA is done hiking Looming recession should prompt the Bank to ease policy earlier than most expect We’re moving forward our forecast for the first rate cut from Q2 2024 to Q1 All of the …
30th August 2023
This page has been updated with additional analysis since first publication. Rapid fall in inflation may prompt earlier rate cuts The sharp fall in inflation in July confirms that the RBA is done tightening and raises the chances that the Bank will start …
This page has been updated with additional analysis since first publication. RBA will look past upswing in retail sales We don’t believe that the healthy uptick in retail sales in July represents a second wind for the Australian consumer. Accordingly, …
28th August 2023
New Zealand activity in free fall Data published by StatsNZ on Wednesday showed that retail sales volumes fell by 1% q/q last quarter, a much weaker result than the 0.4% contraction anticipated by the analyst consensus. The weakness in retail sales was …
25th August 2023
With inflation cooling, the government may soon become more willing to support the economy, but we doubt it will provide as much support as it did during the global financial crisis. However, net trade may not provide as much support as during previous …
21st August 2023
New Zealand’s recession to deepen On Wednesday, the RBNZ left its official cash rate unchanged at 5.50%. Surprisingly, however, the Bank lifted its OCR track higher amid concerns about upside risks to the inflation outlook. In fact, the Bank predicts it …
18th August 2023
This page has been updated with additional analysis since first publication. Unemployment rate ticks higher A boost to the labour supply is helping to take the heat out of Australia’s tight labour market. Accordingly, we’re sticking with our view that the …
17th August 2023
The Reserve Bank of New Zealand left rates on hold, as was widely expected. However, the minutes of today’s meeting were unambiguously on the hawkish side, with the Committee indicating the need to keep policy settings restrictive for a protracted period. …
16th August 2023
RBNZ signals extended pause All 29 of the analysts polled by Reuters, including ourselves, correctly predicted the RBNZ’s decision to leave the OCR unchanged at 5.50%. The minutes of the meeting reiterated the RBNZ’s tightening bias. The Committee appears …
This page has been updated with additional analysis since first publication . Underwhelming wage growth bolsters case for RBA to stay put The sluggish pace of wage growth in Q2 reinforces our view that the Reserve Bank of Australia won't lift interest …
15th August 2023
Although central banks in both Australia and New Zealand are unlikely to drop their hawkish bias anytime soon, we suspect that their tightening cycles are now over. The RBNZ has already succeeded in sending New Zealand into a recession, which is only set …
14th August 2023
Households continue tightening their belts Earlier this week, we got further confirmation that household spending in Australia is now in freefall. The ABS’ monthly indicator showed that the slowdown in household spending deepened in June. As a …
11th August 2023
RBNZ to remain on hold Although inflation and wage growth remain strong, they are showing signs of cooling As recession deepens, rate cuts will be on the table in Q1 2024 With inflation coming off the boil and labour market conditions starting to …
9th August 2023
We previously argued that stretched housing affordability and a looser labour market would result in a second leg down in house prices. However, with the housing market going from strength to strength on the back of resurgent population growth, we now …
7th August 2023
On Tuesday, the Reserve Bank of Australia left its cash rate unchanged at 4.10%, upending the consensus forecast for a 25bp rate hike. The Bank’s detailed Monetary Policy Statement , published earlier today, showed that the Board did discuss the option of …
4th August 2023
Net trade buoyed GDP growth in Q2 The rise in the trade surplus to $11.3bn in June, from $10.5bn in May, was broadly in line with what most had expected (Refinitiv Consensus: $11bn, CE: $11.5bn). Although exports of goods and services fell by 1.7% in …
3rd August 2023
This page has been updated with additional analysis since first publication . Labour market will slacken in earnest before long Although New Zealand’s unemployment rate rose slightly last quarter, the labour market remains very tight by historical …
2nd August 2023
The Reserve Bank of Australia left rates unchanged at 4.10% for the second consecutive month. And while the Board continued to strike some hawkish notes, there is a good chance that its tightening cycle is already over. The RBA’s decision flew in the face …
1st August 2023
RBA stands pat The RBA’s decision to leave its cash rate unchanged at 4.10% means that its almost certain that our forecast for a terminal rate of 4.60% won’t come to fruition. Ahead of today’s meeting, 20 out of 36 analysts polled by Reuters, including …
Housing rebound continues unabated Australia’s house-price rebound went full steam ahead in July. At the margin, that should strengthen the case for the RBA to lift its cash rate by a further 25bp at its meeting later today. Nonetheless, with resurgent …
The big news out of Australia this week was that both headline and trimmed-mean inflation in Q2 were lower than most had anticipated. However, we still think it’s too soon for the RBA to declare victory in the war on inflation. After all, services …
28th July 2023
This page has been updated with additional analysis since first publication. Retail sales soften anew The sharp decline in retail sales in June suggests that sales volumes fell for a third consecutive quarter in Q2. With the RBA sounding increasingly …
Economic activity slowing and inflation weakening faster than anticipated However, labour market still very tight and services inflation still accelerating Bank to hike to 4.35% next week, but September rate hike is a close call With inflation …
26th July 2023
This page has been updated with additional analysis since first publication. RBA will deliver at least one more rate hike The faster-than-expected slowdown in inflation in Q2 may convince the RBA that it has done enough to rein in price pressures. …
New Zealand inflation looks sticky CPI data published on Wednesday revealed that New Zealand’s consumer prices rose by 1.1% q/q in Q2, only slightly below the 1.2% quarterly rise in Q1. Nonetheless, favourable base effects meant that annual inflation fell …
21st July 2023
This page has been updated with additional analysis since first publication . Labour market continues full steam ahead With the labour market still running red hot, we think the Reserve Bank of Australia has more work to do. Accordingly, we’re sticking …
20th July 2023
Provisional data from the Australian Bureau of Statistics suggest that consumer spending slumped in Q2, as households sharply pared back discretionary expenditure. Faced with falling real incomes and depleted savings buffers, we think households will only …
19th July 2023
This page has been updated with additional analysis since first publication. Headline inflation moderates, but underlying inflation remains elevated Although price pressures are dissipating, they could prove stickier on the way down than we anticipate. As …
RBA softens tone, but further rate hikes remain likely The minutes of the RBA’s July meeting showed that its decision to hit pause was far from a foregone conclusion. Indeed, the Board did consider the option of a 25bp hike alongside the option of leaving …
18th July 2023
As we had anticipated following the publication of the recent review into the institutional framework of the Reserve Bank of Australia, Governor Lowe’s term will end in September. The government announced today that Deputy Governor Bullock will become the …
14th July 2023
The decision by the Reserve Bank of New Zealand to leave rates on hold at 5.50% came as a surprise to no one. Indeed, the Committee noted that monetary policy in New Zealand had turned restrictive far sooner than in many other economies. Although the Bank …
12th July 2023
RBNZ leaves rates unchanged The RBNZ’s decision to leave its official cash rate on hold at 5.50% was widely expected. In fact, all 25 analysts polled by Reuters, including ourselves, had anticipated the pause. The minutes of the July meeting reinforce our …
We expect the RBA to lift rates to 4.85% by November, while the RBNZ's tightening cycle is likely already over with its cash rate now at 5.50%. With house prices now 18% below their January 2022 peak, we think New Zealand's housing downturn has run its …
10th July 2023
Wage growth to climb higher in Australia The big news out of Australia this week was the RBA’s decision to skip a rate hike at its meeting on Tuesday. However, the decision to stay put was largely motivated by a desire to reassess the outlook with a new …
7th July 2023
Net exports will cushion GDP growth in Q2 The rise in the trade surplus, to $11.8bn in May from $10.5bn in April, was stronger than most had anticipated (Refinitiv Consensus: $10.5bn, CE:$10.9bn). Exports of goods and services rose by a solid 4.4% in …
6th July 2023
Press reports suggest that Department of Finance Secretary Jenny Wilkinson is the front-runner to become the next Governor of the Reserve Bank of Australia, though Treasury Secretary Steven Kennedy and RBA Deputy Governor Michelle Bullock are in the …
5th July 2023
RBNZ will leave rates unchanged next week With economy in recession and inflation expectations falling, tightening cycle is over But resilient labour market conditions will delay rate cuts until early-2024 Having raised rates more aggressively than any …
The Reserve Bank of Australia’s decision to keep rates unchanged at 4.10% today suggests that interest rates may not rise all the way to 4.85% as we expect, but further tightening still seems likely . Today’s decision was a very close call: 15 economists …
4th July 2023
Tightening cycle not over yet The RBA’s decision to keep rates unchanged today suggests that interest rates may not rise all the way to 4.85% as we currently expect, but further tightening still seems likely. Today’s decision was a very close call: 15 …
Australia’s house-price rebound showed no signs of slowing in June. However, with the RBA set to swing its rate hammer a few more times, we’re sticking with our view that the upturn will prove fleeting. House prices rose by 1.1% m/m in seasonally-adjusted …
3rd July 2023
The monthly inflation indicator released on Wednesday showed a plunge in headline inflation, but as it happens that fall was driven precisely by the two categories that the ABS strips out from its new measure of inflation excluding volatile items. …
30th June 2023
Labour market still very tight and unit labour cost growth surging Inflation plunged in May but underlying measures moderating less rapidly Bank will deliver 25bp rate hikes at each of its next three meetings While headline inflation plunged in May, …
28th June 2023
Slowdown in inflation not fast enough to prevent further rate hikes The sharp fall in inflation in May raises the risk that Reserve Bank of Australia will not raise any further at the upcoming meeting in July, but we still think that mounting upside risks …
