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Australia Labour Market (May 2022)

The strong rise in employment in May will keep pressure on the RBA to continue its aggressive hiking cycle in the months ahead. World with Higher Rates - Drop-In (21st June, 10:00 ET/15:00 BST): Does monetary policy tightening automatically mean recession? Are EMs vulnerable? How will financial market returns be affected? Join our special 20-minute briefing to find out what higher rates mean for macro and markets. Register now  
Ben Udy Australia and New Zealand Economist
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RBNZ Watch

RBNZ tightening cycle will stop by year-end

Rising interest rates are weighing on the housing market but economic activity is holding up and inflation has continued to accelerate. The upshot is that the Reserve Bank of New Zealand will hike interest rates by another 50bp at the upcoming meeting on 17th August, but we expect smaller 25bp across Q4.

10 August 2022

Australia & New Zealand Economics Weekly

RBA will press on with another 50bp hike next month

The Reserve Bank of Australia has indicated that it will slow the pace of tightening over coming months as tighter policy is starting to weigh on activity. With growth softening rather than collapsing, we’re sticking to our forecast of another 50bp hike next month, but we now expect the Bank to revert to smaller 25bp hikes during the fourth quarter.  

5 August 2022

Australia & New Zealand Data Response

International Trade (Jun. 2022)

The surge in Australia’s trade surplus to yet another record-high in June suggests that net exports will boost Q2 GDP growth by around 1%-pt though that tailwind will fade before long.

4 August 2022

More from Ben Udy

Australia & New Zealand Data Response

New Zealand GDP (Q1 2022)

The fall in GDP at the start of the year was due to the disruption to activity from the Omicron outbreak. Growth will have rebounded strongly in the current quarter, but we suspect falling house prices and high interest rates will weigh on growth further ahead. World with Higher Rates - Drop-In (21st June, 10:00 ET/15:00 BST): Does monetary policy tightening automatically mean recession? Are EMs vulnerable? How will financial market returns be affected? Join our special 20-minute briefing to find out what higher rates mean for macro and markets. Register now  

16 June 2022

Australia & New Zealand Economics Update

Minimum wage rise will keep RBA hiking aggressively

The 5.2% increase in the minimum wage announced by the Fair Work Commission will directly lift the Wage Price Index by around 0.7%-pt. But the increase will also contribute to upward pressure on wage growth and inflation more generally. On that basis, the RBA will need to continue hiking rates aggressively this year.

15 June 2022

Australia & New Zealand Chart Book

Steeper interest rate hikes and larger house price falls

Hawkish shifts by the RBA and the RBNZ in recent weeks have prompted us to forecast an even more aggressive hiking cycle by both central banks in the months ahead. Both central banks hiked rates by 50bp at their latest meeting and we have now pencilled in further 50bp rate hikes in the months ahead. At the same time, house prices have started falling in both countries. House prices are down more than 5% from their November peak in New Zealand. And while prices only just fell in Australia in May, all signs point to the downturn persisting. While we had already expected prices in both countries to decline, the steeper rate hikes we now anticipate will feed through to higher mortgage rates and higher debt repayments. That will weigh heavily on the housing market before long. We have therefore raised our forecast of the peak to trough decline in house prices to 15% in Australia and 20% in New Zealand. And those downturns should cause similar-sized falls in dwellings investment in each country in the years ahead.

9 June 2022
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