Australia & New Zealand
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Rising household debt will limit scope for rate hikes

High and rising household debt in Australia and New Zealand will limit central banks’ scope to hike interest rates. The upshot is that we expect the RBNZ to hike rates by a modest 125bp in the tightening cycle set to start next month, while the RBA’s policy rate may only surpass 1% in 2024.    
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Australia & New Zealand Data Response

New Zealand- Consumer Prices (Q3)

While we think the surge in inflation will start to abate in the year ahead, the strength will surely be worrying the RBNZ, supporting the case for further rate hikes.

18 October 2021

Australia & New Zealand Economics Weekly

Plans to double migration sound good in theory

The new NSW premier has received advice that Australia should double the pace of migration in the coming years to make up for lost population growth. That plan would help ease labour shortages, boost tax revenue and lift GDP growth. We already expect Australia to grow by more than the consensus anticipates next year, but if Australia is able to double the pace of migration growth, GDP would be even stronger than we expect.

15 October 2021

Australia & New Zealand Economic Outlook

Rising inflationary pressures to prompt tightening

Domestic demand is set to rebound from recent lockdowns and labour markets should remain tight. Meanwhile, soaring energy and food prices will keep inflation high for a prolonged period. To be sure, the Reserve Bank of Australia won’t respond to high headline inflation until wage growth picks up in earnest. However, with severe staff shortages and limited immigration, the bargaining position of workers is strong and we expect Australia’s wage growth to reach 3% by the end of next year. We expect the RBNZ to hike rates to 1.5% next year and the RBA to start lifting rates in early-2023.

14 October 2021

More from Marcel Thieliant

Japan Economics Update

New Bank of Japan Governor unlikely to lift rates

The Bank of Japan left policy settings unchanged today and while a new Prime Minister could appoint a more hawkish BoJ Governor, we expect the Bank to keep interest rates unchanged for years.

22 September 2021

Japan Economics Focus

What does deglobalisation mean for Japan?

There are good reasons to think that the natural stalling in globalisation underway won’t do much damage to Japanese manufacturers. And while an abrupt severing of supply chains between China on the one hand and the US and its allies on the other would be highly disruptive, Japanese firms would benefit in the long-run as they could step into the breach. Perhaps the biggest risk is that a more nationalist China focused on raising self-sufficiency makes it increasingly difficult for Japanese firms to operate there.

21 September 2021

Australia & New Zealand Economics Update

Australia- Shipping costs to boost inflation next year

Soaring shipping costs will exacerbate the impact of the weaker exchange rate on import price inflation. Indeed, we expect underlying inflation to return into the RBA’s 2-3% target next year.

20 September 2021
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