Australia & New Zealand
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RBA to hike rates by less than markets anticipate

The RBA still sounded dovish when it kept policy unchanged policy. We think that rates will rise earlier than the Bank anticipates but later and by less than what the financial markets price in.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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RBA Watch

Surge in inflation will prompt first rate hike in August

The rapid tightening of the labour market coupled with the acceleration in underlying inflation will prompt the Reserve Bank of Australia to end its asset purchases at its meeting on Tuesday 1st February. And we now expect the Bank to hike rates to 1.25% by end-2023, with the first hike coming in August. Drop-In (08:00 GMT, 26th Jan): Will the RBA follow the Fed this year? Economists from our Australia and Markets services will talk through the likely path of RBA policy making in 2022 and the implications for Australian bond and currency markets. Register here.

25 January 2022

Australia & New Zealand Data Response

Australia Consumer Prices (Q4 2021)

The strong rise in underlying inflation at the end of last year means the RBA is all but certain to end its asset purchase scheme at its meeting next week. And with underlying inflation now above the mid-point of the RBA’s target, the Bank will come under increasing pressure to hike rates this year.  

25 January 2022

Australia & New Zealand Economics Weekly

RBA to hike rates this year

The fall in the Australian unemployment rate to 4.2% in December means the labour market is now the tightest it has been since 2008. That all but confirms our forecast that the RBA will end its asset purchase programme at its February meeting. And we now think wage growth will rise to 3% by the end of the year. With inflation set to accelerate faster than the RBA has been anticipating, we have brought forward our forecast for the first rate hike from February 2023 to November this year.  

21 January 2022

More from Marcel Thieliant

Japan Economics Update

Participation rate set to fall further

The pandemic has brought a halt to the last decade’s rise in Japan’s participation rate which had allowed the labour force to expand despite challenging demographics. Any post-pandemic recovery is likely to be short-lived: we expect the participation rate to drop back over coming decades and the labour force to be 17% smaller by 2050.

6 December 2021

Australia & New Zealand Economics Weekly

Omicron could add to inflationary pressure

If Omicron were able to evade existing vaccines, a renewed period of lockdowns would be required which would force the RBA to step up its bond purchases. Inflation would fall initially as crude oil prices would continue to weaken, but disruptions to transportation networks coupled with continued strength in goods demand would add to the upward pressure on goods prices. However, for now the activity data suggest that the economy is roaring to life after the recent lockdowns and we’re sticking to our above-consensus GDP forecast of 5% for next year.

3 December 2021

Australia & New Zealand Data Response

Australia International Trade (Oct. 2021)

While it’s early days, the October trade figures suggest that net trade will turn into a drag on GDP growth yet again as imports rebound after the end of lockdowns.

2 December 2021
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