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Australia - Omicron will add to upward pressure on inflation

The Omicron variant will probably result in a stagnation in consumption this quarter. However, by worsening supply shortages it will only add to the upward pressure on inflation. The upshot is that it won’t necessarily prevent the RBA from ending QE in February as we anticipate.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Australia & New Zealand Economics Weekly

Minimum wage to rise by 4% this year

Suggestions by Labor leader Albanese that minimum wage increases in line with inflation plus productivity growth are sustainable are wide of the mark at a time when consumer prices are rising twice as fast as the RBA would like them to. But with even employers supporting a large minimum wage hike, we now expect the Fair Work Commission to lift the minimum wage by 4% next month. While that would reduce the hit to household incomes from soaring living costs, it would add to the upward pressure on inflation. ANZ Drop-in (19th May, 07:00 BST/14:00 SGT): Join economists from our Australia and Markets services shortly after the release of Q1 labour market data on 18th May for a discussion about the Australian growth, inflation and monetary policy outlook. Register now.

13 May 2022

Australia & New Zealand Economics Update

New Zealand - Wage growth will rise further before it falls

The 6% rise in the minimum wage will help lift wage growth further this year. But a loosening labour market and smaller minimum wage hikes in the years ahead will facilitate a slow down in wage growth from next year. Markets Drop-In (11th May, 10:00 EDT/15:00 BST): We’re discussing our Q2 Outlook reports and what they say about the potential performance of bonds, equities and FX rates as inflation peaks in a special 20-minute briefing on Wednesday. Register now.

11 May 2022

Australia & New Zealand Economics Update

Australia - Falling real incomes won’t derail consumption for now

The sharpest fall in real incomes since the 1990/91 recession won’t prevent a strong rebound in consumption this year and next. But with the tailwind from reopening the economy set to fade, consumption and GDP growth will fall below trend in 2024, prompting the RBA to cut interest rates. Markets Drop-In (11th May, 10:00 EDT/15:00 BST): We’re discussing our Q2 Outlook reports and what they say about the potential performance of bonds, equities and FX rates as inflation peaks in a special 20-minute briefing on Wednesday. Register now.

9 May 2022

More from Marcel Thieliant

Japan Economics Update

Key calls for 2022

We expect GDP to return to its pre-virus path in the second half of the year as services spending finally returns to near-normal. However, the risks to that forecast remain tilted to the downside as consumers may remain cautious for longer. Meanwhile, we expect the BoJ to keep a lid on 10-year JGB yields even as yields rise further elsewhere. The upshot is that the yen will continue to weaken.

5 January 2022

Japan Economics Update

BoJ won’t join hawkish shift by other central banks

While central banks elsewhere are becoming increasingly hawkish, the Bank of Japan kept policy loose today and is set to remain among the most dovish central banks for the foreseeable future.

17 December 2021

Australia & New Zealand Economics Update

Australia - Government yet to deliver pre-election spending boost

The government unveiled only modest increases in spending in today’s fiscal update. And while the unemployment rate has now reached levels where the Treasurer has pledged to start repairing the public finances, the government’s priority remains to support the economy amidst continued virus uncertainty. The upshot is that a genuine spending boost will still happen ahead of federal elections in May.  

16 December 2021
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