ANZ Weekly: RBA Board, Aus. Budget Update, NZ GDP

Although the Australian Treasurer’s new appointments to the RBA’s monetary policy committee were well received, the same cannot be said of his mid-year Budget Update. The government appears intent on loosening its purse strings, even though the economy is operating near full capacity. The strength of public demand is a key reason why we believe the RBA won’t loosen policy much in the coming year. In contrast, new data showing that the New Zealand economy is experiencing a much sharper downturn than previously thought reinforces our view that the RBNZ will cut rates more aggressively than any other DM central bank.