Our ANZ Chart Pack has been updated with the latest data and our analysis of recent developments.
At first glance, Australia and New Zealand should be fairly insulated from the brunt of the US’s ongoing trade war. Both countries have small manufacturing sectors, export little to the US and haven’t been hit with high US tariffs. That said, second-round effects stemming from weaker demand from key trading partners in Asia, lower commodity prices, and elevated business uncertainty all present downside risks to the outlook. Assuming the nascent recovery isn’t set back meaningfully, we expect the RBA to return policy settings to neutral by cutting the policy rate to 3.6% over the months ahead. By contrast, the RBNZ will cut rates by another 100bp, to 2.5%, given that the need to shore up growth following last year’s deep recession.
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