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Strong bounce in retail sales won’t keep RBA from cutting in August The solid pickup in retail sales in June doesn’t detract from the fact that goods spending across Q2 was rather lacklustre. That being the case, the data won’t stand in the way of the RBA …
31st July 2025
Progress on disinflation will pave the way for an August cut With underlying inflation inching closer towards the mid-point of the RBA’s 2-3% target, the Board should have no qualms about handing down a 25bp cut next month. And with activity still weak …
30th July 2025
Despite its gradualist approach, RBA will cut further than most expect Although the RBA judged that leaving rates on hold was the more prudent choice at its meeting earlier this month, it did signal that there was more easing in the pipeline. Our sense is …
22nd July 2025
RBNZ to cut further as inflation remains subdued With underlying price pressures remaining benign, the RBNZ is likely to loosen policy a bit further than most are anticipating. The 0.5% q/q rise in consumer prices last quarter was a touch softer than the …
21st July 2025
Labour market starting to turn The sharp rise in unemployment in June makes the RBA’s decision to leave rates on hold earlier this month look like a policy error. We’re increasingly convinced that the incoming data flow will prompt the Bank to cut rates …
17th July 2025
RBNZ pauses easing cycle, but signals more cuts are coming While the RBNZ predictably left rates on hold today, it signalled that it was likely to loosen policy further as long as capacity pressures continued to ease. The RBNZ’s decision to leave the …
9th July 2025
RBA still likely to cut rates much further The Reserve Bank of Australia defied widespread expectations of a rate cut at today’s meeting, but we still expect the Bank to cut rates by another 100bp over the coming year. The Bank’s decision to leave the …
8th July 2025
Lift in household spending not as strong as it seems The strong pickup in household spending in May is likely overstating the momentum behind private consumption. As a result, we don’t think it will stand in the way of the RBA loosening policy settings …
4th July 2025
Weak retail sales print locks in July cut for RBA With consumer spending remaining in the doldrums, there is a strong case for the RBA to cut rates faster and further than most are predicting. The 0.2% m/m rise in retail sales in May was markedly weaker …
2nd July 2025
Sharp fall in inflation likely to reinforce RBA’s dovish pivot With price pressures easing markedly in May, the RBA may well front-load monetary easing to a greater degree than we’re predicting. According to the monthly CPI indicator, headline inflation …
25th June 2025
RBA’s easing cycle has further to run Labour market and population data published today are sending mixed signals about capacity pressures in the Australian economy. Either way, they probably won’t prevent the RBA from cutting rates further in the months …
19th June 2025
Despite strong bounce in Q1, economy not out of the woods yet Although New Zealand’s recovery gained traction last quarter, there are signs that the upshift in momentum will prove short-lived. Accordingly, we still think there’s a strong case for the RBNZ …
GDP data put RBA between a rock and a hard place Although activity was off to a poor start in 2025, the persistent strength in unit labour cost growth will constrain the RBA’s ability to provide much policy support. The 0.2% q/q rise in real GDP in Q1 was …
4th June 2025
RBA still wary of adopting an expansionary policy stance Although the RBA’s easing cycle has further to run, the Bank is unlikely to cut rates as far as markets are anticipating. The minutes of the RBA’s May meeting confirmed that the Board had considered …
3rd June 2025
Pullback in retail sales complicates matters for the RBA Despite the ongoing slump in consumer spending, we’re not convinced the RBA will cut rates as aggressively as markets are anticipating. The 0.1% m/m fall in retail sales was a much weaker outturn …
30th May 2025
RBNZ cuts by 25bp, signals further easing is likely With the RBNZ clearly concerned about the health of the economy, we continue to believe that its easing cycle has much further to run. The RBNZ’s decision to cut rates by 25bp, to 3.25%, at its meeting …
28th May 2025
Hot CPI print will give the RBA pause for thought With underlying price pressures proving somewhat persistent, we're sticking to our view that the RBA won't cut rates as far as markets are anticipating. According to the monthly CPI indicator, headline …
Output growth slows, inflationary pressures ease The step-down in business activity this month, combined with signs of easing price pressures, supports our view that the RBA’s easing cycle has further to run. According to today’s flash estimate, the …
22nd May 2025
RBA cuts by 25bp, leaves the door open for further easing With the Bank growing increasingly concerned about downside risks to the economy, there is a good chance that it will cut rates further than we are currently anticipating this cycle. The RBA’s …
20th May 2025
Labour market continues to fire on all cylinders With the labour market going from strength to strength, we’re more convinced than ever that the RBA will be reluctant to cut rates aggressively. Accordingly, we’re sticking to our forecast for a terminal …
15th May 2025
Wage growth should moderate again before long The pick-up in wage growth in Q1 won’t prevent the RBA from cutting interest rates next week but it will limit the scope of additional easing thereafter. The 0.9% q/q rise in the wage price index last quarter …
14th May 2025
This page has been updated with additional analysis since first publication. Ample spare capacity in the labour market will support disinflation Although New Zealand’s unemployment rate held steady in Q1, the details of today’s jobs report were far from …
7th May 2025
Labor expands majority in election blowout The Australian Labor party, led by Prime Minister Anthony Albanese, is cruising towards victory in yesterday’s federal election. Given that our forecasts assumed policy continuity, we are inclined to leave them …
4th May 2025
Weak retail spending raises risk of looser monetary policy With consumers spending remaining sluggish, risks to our interest-rate forecasts are tilted to the downside. The 0.3% m/m rise in sales values in March was a bit softer than the 0.4% increase the …
2nd May 2025
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
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
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 …
17th April 2025
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% …
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
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 …
1st April 2025
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 …
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 …
26th 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
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
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. …
4th March 2025
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 …
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 …
26th 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
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 …
19th February 2025
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
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 …
This page has been updated with additional analysis since first publication. More slack than meets the eye With the labour market continuing to cool, another 50bp cut by the RBNZ later this month is all but nailed on. The 0.1% q/q fall in employment in Q4 …
4th February 2025
RBA's February rate cut is still on Although retail sales rose strongly last quarter, we doubt the pickup in consumer spending will keep the RBA from beginning its easing cycle later this month. The 0.1% m/m fall in sales values in December was a much …
3rd February 2025
Soft CPI data paves the way for RBA to cut in February With underlying inflation on track to enter the RBA’s 2-3% target band this quarter, we now expect the Bank to begin its easing cycle at its next meeting in February. The 0.2% q/q rise in consumer …
29th January 2025
This page has been updated with additional analysis since first publication. With price pressures continuing to abate, the RBNZ should have no qualms about cutting rates by another 50bp at its meeting next month. The 0.5% q/q rise in consumer prices last …
21st January 2025
This page has been updated with additional analysis since first publication. Tight labour market bolsters case for RBA to stay put Although we expect the labour market to cool in earnest over the course of this year, risks to our forecast that the …
16th January 2025
This page has been updated with additional analysis since first publication. Consumer spending showing tentative signs of life Although the boost from November Black Friday sales disappointed expectations a bit, consumer spending does appear to have been …
9th January 2025
This page has been updated with additional analysis since first publication. Disinflation gathering momentum The RBA is unlikely to pay much heed to the slight pickup in headline inflation in November. In fact, with underlying price pressures showing …
8th January 2025
