Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
CPI data don’t support the case for below-neutral rates Although trimmed mean CPI gained a bit of momentum in q/q terms last quarter, it probably won’t keep the RBA from cutting rates by another 25bp at its May meeting. However, given lingering price …
30th April 2025
Case for aggressive easing remains weak Flash PMI data released this Wednesday suggest that ongoing global tensions are doing little to dent business confidence in Australia. Although firms reported a second successive decline in new export business as a …
25th April 2025
At first glance, Australia and New Zealand should be fairly insulated from the brunt of the US’s ongoing trade war. Both countries have small manufacturing sectors, export little to the US and haven’t been hit with high US tariffs. That said, second-round …
24th April 2025
PMI data bolster the case for a shallow easing cycle Early signs suggest that the economy is holding up well despite heightened uncertainty. With firms also reporting stronger inflationary pressures, we’re sticking to our view that the RBA won’t cut rates …
23rd April 2025
RBA will go slow and steady The minutes of the RBA’s April meeting revealed that the Bank’s decision to leave rates unchanged at 4.10% was underpinned by its view that risks to its outlook were two-sided. Granted, that assessment was made prior to Trumps’ …
17th April 2025
Strong labour market lessens the need for aggressive cuts With the labour market broadly on solid ground, we expect the RBA to deliver only a shallow easing cycle. The 32,00 rise in employment in March was a touch softer than the 40,000 increase that we …
RBNZ won’t fret the modest uptick in inflation Although headline inflation in Q1 was stronger than it had anticipated, we suspect the RBNZ will take comfort from the fact that measures of core inflation continued to fall towards the mid-point of its 1-3% …
The upcoming federal election on 3 rd May appears likely to result in a hung parliament. Although the ruling Labor party’s recent uptick in the polls suggest that it is in pole position to form a minority government, we wouldn’t count out the …
16th April 2025
While the recent drop in crude oil prices would lower inflation a bit, that drag will be more than offset by a boost from the weaker Australian dollar. The upshot is that barring a sharp fall in business confidence, we’re sticking to our forecast that the …
14th April 2025
Australian economy should hold up As one might have expected, the fallout from Trump’s trade war continued to dominate the headlines this week. In short, a deep rout in US bond markets appears to have convinced Trump to pare back tariffs on several …
11th April 2025
President Trump’s trade war has created material downside risks for the global economy. Our forecasts assume that tariffs on most countries outside China will stay at 10% and retaliation by other governments will be moderate. In this scenario, global GDP …
10th April 2025
RBNZ will cut further than most anticipate The RBNZ cut rates by 25bp at its meeting today, while signalling that further easing would be forthcoming in the months ahead. We think the Bank will ultimately loosen policy settings to a greater degree than …
9th April 2025
Australia and New Zealand are safe havens in the current global trade storm because they have small manufacturing sectors, export little to the US and haven’t been hit with high US tariffs. We’re therefore sticking to our forecast that the RBA will only …
7th April 2025
More policy support may be forthcoming Although the RBA left rates unchanged on Tuesday, it sounded a lot more dovish than it did in February. Indeed, it significantly toned down its concerns about upside inflation risks and the dangers of prematurely …
4th April 2025
We hosted two online Drop-In sessions on 3 rd April to discuss the fallout from President Trump’s Liberation Day tariff announcement. (See a recording here .) This Update contains answers to some of the questions that we received and links to several more …
3rd April 2025
We expect the Reserve Bank of New Zealand to cut its Official Cash Rate by 25bp, to 3.5%, at its next meeting on 9 th April. Although activity is now on the mend, spare capacity will ease only gradually, consistent with a sustained decline in …
2nd April 2025
While the RBA is becoming increasingly confident that inflation will sustainably return to target, we still expect its easing cycle to be shallower than most anticipate. The RBA’s decision to leave its policy rate unchanged at 4.10% was correctly …
1st April 2025
RBA’s easing cycle will be shallow While the RBA is becoming increasingly confident that inflation will sustainably return to target, we still expect its easing cycle to be shallow. The Bank’s decision to leave the cash rate unchanged at 4.10% was …
Australian house price growth remained soft in March, amid still-weak housing demand. Although the RBA’s easing cycle could help deliver a shift in momentum later this year, stretched affordability is likely to constrain the strength of the rebound. Much …
Consumer spending remains muted With consumers seemingly keeping spending on a tight leash, there is a risk that the RBA will loosen policy a bit more than we currently expect this cycle. The 0.2% m/m rise in retail sales values in February was a touch …
RBA will cut two more times this year Australian Prime Minister Anthony Albanese confirmed today that the next general election will be held on 3 rd May. The announcement comes closely on the heels of the government’s 2025/26 Budget , which includes an …
28th March 2025
In this Update, we answer several key questions about how the announced 25% tariffs on US imports of autos and parts might affect the global economy and the US itself. Mexico, Slovakia and Korea are most exposed with up to 1.6% of GDP at risk. But the …
27th March 2025
The Reserve Bank of Australia will leave policy settings unchanged at its upcoming meeting that ends on 1 st April and will probably still sound hawkish. However, with inflation set to soften a touch faster than the Bank had anticipated, we still expect …
26th March 2025
Weakness in Australia’s underlying inflation points to May rate cut The weakness in underlying inflation means that the RBA will probably cut rates again 25bp in May and creates some downside risks to our forecast that the Bank will only cut rates to …
It is becoming clear that President Trump’s actions are driven by both his fixation on reducing the US trade deficit and his transactional approach to dealing with other countries. So, even though the Trump administration’s ideas to transform the entire …
25th March 2025
As expected, Australian Treasurer Jim Chalmers unveiled a slew of new spending measures in today’s pre-election Budget. However, we don’t believe the scope of fiscal expansion is large enough to keep the RBA from cutting rates a bit further this year. In …
Overview – Both Antipodean economies seem to have turned a corner at the end of last year, and we expect the recoveries to gather momentum in the coming quarters. Given the tight labour market and elevated public demand, we believe the RBA will only …
Foreign student arrivals not a gamechanger Yesterday the ABS published data showing that Australia’s population growth slowed from 2% y/y in Q2 to 1.8% y/y in Q3. That slowdown was driven primarily by easing net overseas migration: on a 12-month basis, …
21st March 2025
Australia’s labour market won’t loosen much further The labour market remained tight in February and we don’t expect it to loosen much further. The 52,800 fall in employment in February was much weaker than the analyst consensus of a 30,000 rise and …
20th March 2025
New Zealand economy escapes recession As expected, the New Zealand economy came out of recession at the end of last year. As the impact of recent monetary loosening filters through, we expect the recovery to continue apace in the coming quarters. The 0.7% …
19th March 2025
Budget deficit not widening as much as feared Treasurer Jim Chalmers will hand down the 2025/26 Budget on 25 th March and he will be eager to share the good news that the budget deficit in 2024/25 will be smaller than the Treasury had predicted in the …
14th March 2025
RBA won't provide much interest rate relief The minutes of the RBA’s February meeting confirmed that the Bank’s decision to cut rates last month had come down to the wire. Moreover, with concerns still persisting about lingering inflation risks, the Board …
7th March 2025
Weak productivity growth will tie the RBA’s hands Although activity picked up firmly in Q4, private demand remained relatively sluggish. Even so, with productivity growth dismal and unit labour cost growth accelerating, the RBA is unlikely to loosen …
5th March 2025
The events of the past two weeks have called into question whether the US is severing ties not just with adversaries such as China but also allies, including Canada, Mexico and the European Union. This would radically alter the shape of the fractured …
4th March 2025
This page has been updated with additional analysis since first publication. Consumer rebound has further to run Today’s retail sales release should mollify the RBA’s concerns that the pickup in consumer spending last quarter may have been a one-off. …
RBA will only deliver shallow easing cycle The minutes of the RBA’s February meeting are consistent with our view that the Bank will continue to ease policy but won’t cut interest rates very far. It came as no surprise that the Board debated the decision …
New Zealand’s current account deficit will remain large as domestic demand rebounds and the government is running a sizeable structural budget deficit. While the New Zealand dollar has recently been among the worst-performing G10 currencies, we expect it …
3rd March 2025
The modest uptick in Australian house prices last month is unlikely to mark the beginning of a meaningful rally. With the Reserve Bank of Australia set to deliver a shallow easing cycle, housing affordability will remain stretched, weighing on the …
Soft data belie lingering capacity pressures At first glance, data released this week should give the Reserve Bank of Australia greater confidence that it has brought inflation under control. To start with, the ABS’ Monthly CPI indicator showed that both …
28th February 2025
Our ANZ Chart Pack has been updated with the latest data and our analysis of recent developments. The RBA began its easing cycle with a 25bp cut this month, but it appeared in no hurry to loosen policy settings further. We expect the Bank to cut again in …
26th February 2025
This page has been updated with additional analysis since first publication. With price pressures remaining subdued, RBA can ease a bit further The relatively soft CPI print for January should ease some of the RBA’s concerns about the stickiness of …
The Australian and New Zealand dollars have fared worse than almost every other currency over the past few months. We think they will continue to do so. The US dollar has been on the back foot lately, unwinding some of its earlier Trump-era gains as US …
25th February 2025
Risks are tilting towards less easing As most had expected, the Reserve Bank of Australia began its easing cycle with a 25bp cut this Tuesday. However, in her post-meeting press conference Governor Bullock took pains to rein in expectations for further …
21st February 2025
This page has been updated with additional analysis since first publication. Hot jobs report will keep the RBA vigilant The tight labour market reinforces our view that the RBA will deliver a shallow easing cycle. We expect the Bank to hand down only two …
20th February 2025
Having handed down a third consecutive 50bp rate cut at its meeting today, the Reserve Bank of New Zealand is likely to slow the pace of easing going forward. That said, we still think there’s a compelling case for a lower terminal rate than most are …
19th February 2025
RBNZ to cut further than most expect Having handed down its third consecutive 50bp cut today, the RBNZ is likely to slow the pace of easing going forward. That said, we still think there’s a compelling case for a lower terminal rate than most are …
Wage pressures continue to soften Although the RBA will welcome the continued slowdown in wage growth, we still think it will deliver only a shallow easing cycle. The 0.7% q/q rise in the wage price index last quarter was a touch softer than most had …
The decision by the US and Russia to “lay the groundwork” to end the war in Ukraine marks a potentially significant turning point after three years of conflict. Negotiations will take time and the macroeconomic implications will depend on the features of …
18th February 2025
When the Reserve Bank of Australia handed down its inaugural 25bp cut today, it indicated that any further withdrawal of monetary restriction would be limited, given residual inflationary pressures. Accordingly, we’re comfortable with our view that the …
RBA starts easing, but tempers expectations for further cuts When the Reserve Bank of Australia cut rates by 25bp at its meeting today, it signalled that any further withdrawal of monetary restriction would be gradual. Accordingly, we’re comfortable with …
