My subscription
...
Filters
My Subscription All Publications

Underlying inflation to remain subdued for now

Inflation was subdued in Q1 and while we expect the plunge in prices in Q2 2020 to cause a surge in inflation this quarter, headline inflation should be just 2% by year-end. More importantly, we expect underlying inflation to remain subdued over the rest of this year. That supports our view that the RBA will announce a third extension of its bond purchase program in June.
Ben Udy Australia and New Zealand Economist
Continue reading

More from Australia & New Zealand

Australia & New Zealand Data Response

Australia Retail Sales (May 2022)

The strong rise in retail sales in May highlights the strength in the Australian economy and is consistent with our view that the RBA will continue to hike rates aggressively in the months ahead.

29 June 2022

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

More from Ben Udy

RBNZ Watch

RBNZ tightening creeping closer

We doubt the RBNZ will adjust any policy settings when it meets next Wednesday 14th July. However, as the New Zealand economy continues to recover faster than the RBNZ expects we think the Bank will adopt an increasingly hawkish tone. We expect the Bank to announce an end to its asset purchases In August and to start hiking rates from May 2022.

7 July 2021

Australia & New Zealand Data Response

Australia: Retail Sales (May 2021)

Retail sales are sure to decline in June as the impact of the recent lockdowns weighs on household consumption. Even so, the rise in retail sales in May means the risks to our forecast the consumption was unchanged in Q2 are to the upside.

5 July 2021

Australia & New Zealand Economics Weekly

Labour shortages to persist

Job vacancies have continued to surge in Australia highlighting worsening staff shortages in almost every industry. While subdued labour mobility was an initial driver, we estimate that labour mobility is almost back at its pre-virus level. Instead, we still believe that the border closure is the biggest driver of these shortages. Given that we don’t expect the border to reopen until the middle of next year, the labour market is set to remain tight for a long time to come.

2 July 2021
↑ Back to top