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Our key calls for 2022

We think that GDP growth in Australia will surprise to the upside. But with wage growth only approaching the 3% watermark the RBA would like to see by year-end, we expect the Bank to keep rates on hold. By contrast, we expect the RBNZ to hike interest rates a bit faster than most expect. Our view that commodity prices will continue to fall means that the Aussie dollar will weaken further.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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More from Australia & New Zealand

RBA Watch

RBA to keep hiking by 50bp for now

The Reserve Bank of Australia will probably lift the cash rate by another 50bp in July and August before reverting to smaller 25bp hikes. However, the risks are tilted towards a prolonged period of aggressive tightening and rates may well peak above our current forecast of 3%.

28 June 2022

Australia & New Zealand Economics Weekly

More 50bp hikes coming

We agree with RBA governor Phillip Lowe that market pricing for the Cash rate looks too aggressive. But we also think the consensus is still too dovish. After all, Governor Lowe is starting to grow concerned that wage growth will be too strong to allow the Bank to meet its target. And the RBA is still lagging behind a number of its peers in its hiking cycle. We therefore expect the RBA to hike rates to a peak of 3.1%, higher than the analyst consensus of a peak of 2.60%.

24 June 2022

Australia & New Zealand Economics Weekly

Inflationary pressures keep building

The big minimum wage hike announced by the fair work commission this week will lead to higher wage growth over the coming year. Given the tightness in the labour market and rising cost pressures, businesses will be forced to pass that rise onto consumers. That suggests the risks to our forecast that inflation will peak just above 7% in Q3, are tilted to the upside. 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  

17 June 2022

More from Marcel Thieliant

Japan Economics Weekly

Recovery in industrial activity will run out of steam

Japan’s car industry has rebounded quickly from the disruptions caused by Delta waves across South-East Asia a few months ago. But amidst persistent supply shortages, output hasn’t quite returned to pre-pandemic levels yet. Omicron may create additional strains on supply chains and will also result in a renewed drop in consumer spending this quarter. The upshot is that following a strong post-vaccination bounce in Q4, GDP growth is set to slow sharply this quarter.

7 January 2022

Australia & New Zealand Economics Update

Australia - Omicron will add to upward pressure on inflation

The Omicron variant will probably result in a stagnation in consumption this quarter. However, by worsening supply shortages it will only add to the upward pressure on inflation. The upshot is that it won’t necessarily prevent the RBA from ending QE in February as we anticipate.

6 January 2022

Japan Economics Update

Key calls for 2022

We expect GDP to return to its pre-virus path in the second half of the year as services spending finally returns to near-normal. However, the risks to that forecast remain tilted to the downside as consumers may remain cautious for longer. Meanwhile, we expect the BoJ to keep a lid on 10-year JGB yields even as yields rise further elsewhere. The upshot is that the yen will continue to weaken.

5 January 2022
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