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New Zealand Consumer Prices (Q2 2022)

The stronger-than-expected rise in consumer prices in Q2 adds some upside risks to our forecast that the Reserve Bank of New Zealand will lift rates to 3.5%, but we still think that weaker economic activity will force the Bank to stop tightening before long.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Australia & New Zealand Economics Update

RBNZ will hike rates to 4% but cut next year

The RBNZ lifted the overnight cash rate by 50bp to 3% today as everyone had anticipated and signaled that it will deliver another 50bp hike in October. We now expect the Bank to hike rates to a peak of 4% instead of our previous forecast of 3.5%, but we still expect rate cuts next year.

17 August 2022

Australia & New Zealand Data Response

Australia Wage Price Index (Q2)

Wage growth surpassed its pre-virus peak in Q2 and will jump above 3% this quarter due to a surge in the minimum wage and a tightening labour market. Asia Drop-In (25th Aug.): What’s the economic impact of a weak yen? What does the latest China-Taiwan flare-up mean for decoupling? How ugly are conditions in China’s real estate sector? Join economists from across our Asia services for this regular briefing on the region’s big investment stories. Register now.

17 August 2022

Australia & New Zealand Economics Update

Higher migration not enough to cool labour market

An increase in the permanent migration programme will help to alleviate labour shortages. But the rapid tightening of the labour market in recent months has been driven by strong labour demand rather than a shortfall in supply. The upshot is that the RBA would still have to tighten policy further.

16 August 2022

More from Marcel Thieliant

Japan Economics Weekly

Prospect of smaller budget deficits adds to BoJ’s woes

With tax revenues soaring and pandemic-related expenditure set to be phased out, the budget deficit will shrink sharply over coming years. However, the resulting decline in bond issuance will make it more difficult for the Bank to defend its 10-year yield target without further undermining the functioning of the bond market.

15 July 2022

Australia & New Zealand Economics Weekly

RBA will deliver 75bp rate hike next month

With consumer spending resilient, the labour market tightening far faster than anyone had anticipated and inflation set to surge further in Q2, we now expect the Reserve Bank of Australia to deliver a 75bp rate hike at the upcoming meeting in August. Meanwhile, the Reserve Bank of New Zealand will probably hike by another 50bp next month, but we expect the economic recovery in New Zealand to lose steam before long.

15 July 2022

Bank of Japan Watch

Bank has breathing room to reconsider tolerance band

The Bank of Japan will signal prolonged loose policy by forecasting below-target inflation over the next couple of years in next week’s “Outlook” report. Meanwhile, the fall in global bond yields in recent weeks provides a window in which the tolerance band around the 10-year yield target could be widened.

14 July 2022
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