Australia & New Zealand

RBA’s dovish stance set to be challenged

While the RBNZ this week hiked interest rates by 25bp and signalled that more is to come, the RBA remained dovish. That makes sense in light of the continued weakness in underlying inflation and wage growth, but we still think that soaring commodity prices will eventually prompt Australia’s union to demand higher wages amidst a tight labour market. The looming strike by the Transport Workers Union is a sign of things to come.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Australia & New Zealand Economics Weekly

Omicron could add to inflationary pressure

If Omicron were able to evade existing vaccines, a renewed period of lockdowns would be required which would force the RBA to step up its bond purchases. Inflation would fall initially as crude oil prices would continue to weaken, but disruptions to transportation networks coupled with continued strength in goods demand would add to the upward pressure on goods prices. However, for now the activity data suggest that the economy is roaring to life after the recent lockdowns and we’re sticking to our above-consensus GDP forecast of 5% for next year.

3 December 2021

Australia & New Zealand Data Response

Australia International Trade (Oct. 2021)

While it’s early days, the October trade figures suggest that net trade will turn into a drag on GDP growth yet again as imports rebound after the end of lockdowns.

2 December 2021

Australia & New Zealand Data Response

Australia CoreLogic House Prices (Nov.)

Housing demand remains very strong, but rising interest rates and lending restrictions should result in a further slowdown in house price growth next year.

1 December 2021

More from Marcel Thieliant

Japan Economic Outlook

Conditions for strong recovery finally in place

With the Delta wave having ebbed and the majority of the population now fully vaccinated, we expect a strong rebound in domestic demand over the coming months. But the inflation concerns that hang over other major developed economies won’t materialise and the Bank of Japan will keep policy loose for the foreseeable future.

7 October 2021

Australia & New Zealand Economics Update

Australia- Sustained high inflation will prompt rate hikes in 2023

The RBA today stuck to its guns by predicting that rates won't rise until 2024, but our view that inflation will remain higher for longer means it will happen in early-2023 already.

5 October 2021

Australia & New Zealand Economics Weekly

Soaring food and energy prices to keep inflation high

The spike in rural commodity prices should spill over into higher food inflation before long. And while the impact of higher energy commodity prices is less clear cut, we think electricity inflation is also set to rise. That’s why we think headline inflation is set to ease less sharply than the RBA anticipates next year. Amid early signs that soaring consumer prices will result in stronger wage growth, we expect the RBA to hike rates in early 2023.

1 October 2021
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