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President Trump’s latest flurry of tariffs implies that the US effective tariff rate will rise to about 17%, from 2.3% last year. That is a little higher than we assumed and so presents modest downside risks to our forecast for global GDP growth and a …
1st August 2025
Bank will cut further than most expect The Reserve Bank of Australia is likely to breathe a sigh of relief that its consternations about lingering price pressures in the economy didn’t come to pass. Indeed, as Deputy RBA Governor Andrew Hauser noted in a …
Australia’s housing market gained traction in June, and leading indicators suggest the housing rebound has further to run. But with affordability set to remain extremely stretched despite the RBA’s easing cycle, we think the incipient house-price rally …
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
Slow and steady The minutes of the RBA’s July meeting shed more light on the Bank’s surprise decision to leave rates on hold earlier this month. A majority of the Board believed it would be premature to lower the cash rate for a third time within the span …
25th July 2025
Australia’s economy is struggling to gain momentum, while the recent rebound in activity in New Zealand increasingly looks like a false start. As the lull in activity lifts spare capacity, underlying price pressures should continue to ease in both …
24th 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
RBA can pivot back to an easing bias The ABS’ monthly labour force survey published yesterday increasingly suggests that the Australian labour market is going through something of a soft patch. Indeed, the modest rise in employment in June just barely …
18th 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
We aren’t convinced that a pick-up in demand in response to looser monetary policy will unleash a wave of price hikes that firms were previously holding back. Accordingly, we’re sticking to our forecast that the RBA will loosen monetary policy a bit …
16th July 2025
New Zealand’s housing market is still struggling to recover from its steep post-pandemic downturn. Although we still expect it to turn the corner in the coming months, the risk is that it will remain a drag on the broader economy for longer than we …
15th July 2025
Rates will bottom out in mid-2026 The RBA’s decision to leave its cash rate unchanged at its meeting this Tuesday shocked not only financial markets, which had fully priced in a 25bp cut, but also the overwhelming majority of economists. Setting aside the …
11th 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
While the Reserve Bank of Australia’s today defied widespread expectations of a rate cut, we still expect the Bank to resume its easing cycle at its August meeting. And with GDP growth still sluggish and inflation back at target, we expect the Bank to …
8th 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 …
A cut remains more likely than not There is a growing sense amongst most observers that the Reserve Bank of Australia will deliver a 25bp cut at its meeting ending on 8 th July. Indeed, markets are pricing in a whopping 95% chance of that outcome. And …
4th 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 …
The fact that the RBA isn’t cutting interest rates during a housing downturn won’t limit the rebound in house prices, but the extremely stretched level of affordability will do so. Even though we expect interest rates to fall by more than most expect, the …
3rd July 2025
With activity having rebounded strongly in Q1 and headline inflation firming up, the RBNZ is likely to leave rates unchanged at 3.25% next week. However, we’re not convinced that the economy has turned the corner. And with the output gap set to remain …
2nd July 2025
RBA to cut by 25bp next week, as recovery stumbles and price pressures ease Although labour market remains tight, it is not standing in the way of disinflation Bank will cut rates further than most analysts are anticipating We expect the RBA to cut rates …
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 …
House prices rose the most since last year in June and with the RBA set to cut interest rates much further, the housing market will continue to gain momentum. However, affordability will remain quite stretched by historical standards so we doubt that …
1st July 2025
Bank will speed up the pace of easing It’s become increasingly clear that the downside risks the RBA has been worried about are starting to manifest. Our GDP Nowcast suggests that recovery is struggling to gain momentum, prompting us to revise down our …
27th June 2025
Overview – Australia’s economy is struggling to gain momentum, while the recent rebound in activity in New Zealand isn’t likely to be sustained. As the lull in activity lifts spare capacity, underlying price pressures should continue to ease in both …
26th June 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
Downside risks persist in Australia Australian employment unexpectedly fell by 2,500 last month, as a 38,700 rise in full-time employment was more than offset by a 41,200 fall in part-time employment. However, with the unemployment rate holding steady at …
20th 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 …
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
13th June 2025
Downside risks growing There are growing signs that economic conditions in Australia have continued to weaken. According to a new NAB business survey, business conditions fell to their lowest point since August 2020 last month. On past form, the data are …
Lingering inflation risks complicate matters There is no sugarcoating the fact that Australia’s economic recovery is struggling to take off. National accounts data released this week showed that real GDP grew by just 0.2% q/q in Q1, well below the 0.45% …
6th June 2025
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
While this year’s minimum wage hike will be only slightly smaller than last year’s, it is unlikely to prevent a further slowdown in wage growth over the coming quarters. That said, with capacity pressures still elevated, we continue to believe that the …
3rd 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 …
Australian house prices edged up a notch in May, and leading indicators suggest they will gather further momentum over the coming months. However, with debt-servicing costs set to remain onerous despite the RBA’s rate cuts, the cyclical upswing is likely …
2nd June 2025
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Europe is being buffeted by geopolitical and geoeconomic shifts but, …
30th May 2025
RBNZ will loosen policy further still As virtually everyone had expected, the RBNZ cut its Official Cash Rate from 3.5% to 3.25% at its meeting this Wednesday. However, the revelation that one member voted to leave rates unchanged came as a surprise to …
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 …
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
29th May 2025
Although continued trade tensions have heightened economic uncertainty, they have had only a modest impact on consumer and business sentiment in the Antipodes. Indeed, we think the Australian economy will grow at around its trend rate over the coming …
As was widely expected, the RBNZ cut its Official Cash rate by 25bp, to 3.25%, today. The revelation that the decision to cut was not a unanimous one has been interpreted as a hawkish signal by financial markets. However, we would put more emphasis on the …
28th 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 …
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 …
Although the détente in the trade war may provide some respite to the Chinese economy in the near term, we remain pessimistic about its longer run prospects. The slowdown in China will undoubtedly have negative spillovers for Australia’s mining sector, …
27th May 2025
Inflation fight isn't over yet While the RBA’s decision to cut rates by 25bp at its meeting on Tuesday was widely expected, the Board’s overtly dovish messaging still caught most observers off guard. Indeed, Governor Bullock made news in her post-meeting …
23rd May 2025
With housing affordability still extremely stretched, we expect house price growth to remain muted even as mortgage rates are set to fall further. However, there’s more scope for dwellings prices to rise in the smaller capital cities, while apartment …
22nd May 2025
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 …
The RBNZ is all but certain to cut its cash rate by 25bp, to 3.25%, at its meeting ending on 28 th May. With the recovery showing signs of faltering, the labour market remaining weak, and underlying inflation continuing to fall, we expect the Bank to …
21st May 2025
