A tale of two central banks

Inflation is moderating rapidly in Australia, despite elevated shelter costs. Moreover, there's little evidence to suggest that a tight housing market is supporting domestic demand through housing wealth effects or new dwellings investment. With the RBA concerned about keeping the economy on an even keel, we expect it to start cutting rates by Q2 itself. By contrast, the RBNZ is actively pushing back against the notion that it needs to rethink its restrictive policy stance in view of weaker-than-expected economic data. Accordingly, we expect it to wait until Q3 to cut rates. That said, when the RBNZ does start cutting rates, we think it will do so at breakneck speed.