Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
The stark deterioration in labour market conditions in New Zealand in the third quarter pretty much guarantees that the RBNZ will cut rates to 2.5% at the meeting in December, from 2.75% now. What's more, it supports our view that rates will then fall all …
4th November 2015
Although the Reserve Bank of Australia (RBA) once again decided to leave interest rates on hold at 2.0%, the new line in the statement that "the outlook for inflation may afford scope for further easing of policy" supports our view that interest rates …
3rd November 2015
The further fall in underlying inflation in Australia in the third quarter could be the start of a period of persistently low inflation that plays a role in prompting the Reserve Bank of Australia to cut interest rates to 1.5% next year. Inflation on the …
2nd November 2015
It is surprising how the recent economic narrative for Australia and New Zealand is similar to the relative performance of the Wallabies and the All Blacks on the rugby field. If this continues, then our forecast that GDP in 2017 will grow by 3.5% in New …
30th October 2015
Today's decision by the Reserve Bank of New Zealand (RBNZ) to leave interest rates at 2.75% is just a pause in a loosening cycle that we believe will end with rates falling to 2.00%. And the news that the RBNZ is not happy with the recent strengthening in …
29th October 2015
The tightening in monetary conditions triggered by the recent rises in mortgage rates by the major banks and the strengthening in the dollar is unlikely to prompt the Reserve Bank of Australia (RBA) to cut interest rates from 2.0% at the policy meeting on …
27th October 2015
Our forecast that underlying inflation in Australia will fall below the Reserve Bank’s 2-3% target range next year suggests that inflation will soon start to have a bigger influence on policy. Although there are a number of factors that could prompt the …
23rd October 2015
Although the Reserve Bank of New Zealand (RBNZ) will probably leave interest rates on hold at 2.75% at the policy meeting on Thursday 29 th October, this will just be a pause in the loosening cycle rather than the end. Our forecast that rates will fall to …
22nd October 2015
Australia is set to overtake Qatar as the world’s largest LNG supplier by 2018. However, recent trends in energy markets pose some headwinds for LNG exporters. In particular, the slump in oil prices has significantly reduced the price of Australia’s …
16th October 2015
The CPI data for the third quarter were not weak enough to make a rate cut at the RBNZ's policy meeting in late October a certainty. But with the full effects of the recent slowdown in economic growth yet to be felt, we think that persistently low …
While the fall in employment in September is unlikely to significantly alter the RBA's view of the economy, we think that a sustained weakening in the labour market will contribute to the RBA cutting interest rates from 2.0% now to 1.5% next year. … …
15th October 2015
The rebound we expect in China over the next few quarters should come as a relief to Australian policymakers and many investors. But long-run prospects for iron ore demand, which makes up more than half of Australia’s exports to China, remain gloomy. The …
9th October 2015
By leaving interest rates on hold at 2.0% for the fifth month in a row today, the Reserve Bank of Australia (RBA) demonstrated that the recent falls in equity prices have not increased its appetite for further rate cuts. We expect that a more general …
6th October 2015
While we remain concerned about the outlook for the Australian economy, we think it will continue to outperform other commodity producers such as Canada, Brazil and Norway. Australia’s labour market will probably remain stronger than those elsewhere, its …
2nd October 2015
Concerns over the health of China’s economy and the fall in domestic equity prices are unlikely to prompt the Reserve Bank of Australia (RBA) to cut interest rates from 2.0% at the meeting on Tuesday 6th October. That said, over the coming months we …
29th September 2015
While we remain more concerned than most about the Australian economy, the latest fall in equity prices won’t significantly restrain consumption growth. There is plenty of scope for households to absorb the hit to wealth by reducing their saving rate …
25th September 2015
Although we wouldn’t recommend placing too much weight on the quarterly rate of GDP growth in any one quarter, the respective 0.2% and 0.4% rises in Australia and New Zealand in the second quarter mark a clear slowdown fromthe rates of the previous two …
24th September 2015
A faster rise in interest rates in the US than widely expected next year will provide a welcome boost to the economies of Australia and New Zealand by leading to a further depreciation of their currencies. This will especially be the case if, as we …
18th September 2015
The disappointingly soft rebound in GDP in the second quarter supports our below consensus forecasts that the economy will grow by just 2.0% this year and that the RBNZ will cut interest rates from 2.75% now to just 2.0% by early next year. … New …
17th September 2015
Even though we expect both the Australian and New Zealand dollars to weaken further, to around US$0.60 and US$0.55 respectively, this won't be enough to prevent GDP growth in both economies from slowing to 2.0% this year and staying there next year too. …
16th September 2015
While the risks to our forecast that the central banks of Australia and New Zealand will eventually reduce interest rates to new record lows of 1.5% and 2.0% respectively (from 2.0% and 2.75% now) are clearly on the upside, those risks are not yet big …
10th September 2015
Another healthy gain in employment in August, as well as a slight fall in the unemployment rate, continued the strong run of Australia’s labour market. The slowdown in GDP growth this year may still feed through into weaker employment growth, but for now …
The most important part of today’s policy announcement by the Reserve Bank of New Zealand is not the third consecutive 0.25% cut in interest rates, to 2.75%, but the Bank’s growing acceptance that a marked economic slowdown is underway. Even so, we still …
Our view that the annual rate of GDP growth in Australia will slow further in the second half of the year suggests that the Australian dollar may yet weaken from its current six-and-a-half-year low of US$0.70 to US$0.65, if not to US$0.60. This would …
4th September 2015
The Reserve Bank of New Zealand (RBNZ) is all but guaranteed to cut interest rates by 0.25% for the third meeting in a row, from 3.00% to 2.75%, on Thursday 10th September. We wouldn’t completely rule out a 0.50% reduction. Either way, we suspect that …
3rd September 2015
Australia's economy slowed sharply in the second quarter, increasing the chances that growth will fall short of the Reserve Bank of Australia's forecasts for this year and next. Given this, rate cuts could soon come back onto the agenda. … Australia GDP …
2nd September 2015
While the Reserve Bank of Australia’s (RBA) decision to leave interest rates on hold at 2.0% for the fourth meeting in row suggests that the chances of further rate cuts have faded further, we still wouldn’t rule out rates being reduced again, perhaps …
1st September 2015
While it is hard to describe any of the recent news on investment in Australia as “good”, the latest figures were not as bad as we had feared. In particular, the plunge in commodity prices does not appear to be spilling over into much weaker investment …
28th August 2015
The continued resilience of the labour market in Australia is the main reason why the Reserve Bank of Australia (RBA) has become less inclined to cut interest rates again. Jobs growth remained strong in July and, notwithstanding what looks like a …
27th August 2015
The Reserve Bank of Australia (RBA) is odds on to leave interest rates on hold at 2.0% at the meeting scheduled for Tuesday 1 st September and the chances of further rate cuts are diminishing. A number of events, however, could prompt the RBA to change …
26th August 2015
While we remain more concerned than most about the Australian economy, we don’t think that the recent sharp falls in equity prices will filter through into much weaker investment or consumption. … Equity price falls don’t materially alter economic …
24th August 2015
Our estimated Taylor Rule shows that the Reserve Bank of New Zealand (RBNZ) is keeping interest rates lower than current economic conditions would usually warrant in an effort to boost inflation. If the economy weakens as we expect, then this implies that …
21st August 2015
Our new Capital Economics New Zealand Activity Proxy (CE NZAP) provides a timely guide to changes in economic activity in New Zealand well ahead of the official GDP data and is a useful barometer of the extent of the current slowdown in GDP growth. … …
20th August 2015
While in the long-term we expect that services exports will play a big role in filling the hole in the economy left by mining, in the near-term the problem is that a lot of the boost to services exports from the weaker dollar has already been felt. … …
14th August 2015
While our analysis suggests that it is the surprising leap in the unemployment rate in Australia in July that is sending the false signal and not the surprising strength of employment growth, there are still reasons to believe that the labour market will …
7th August 2015
Another sizeable gain in Australian employment in July has continued the remarkably strong run of recent months. However, today's data also showed a sharp rise in labour force participation, which has pushed the unemployment rate back up to its joint …
6th August 2015
The Reserve Bank of Australia’s decision to leave interest rates on hold at 2.0% for a third consecutive month appears to diminish the chances that rates will eventually fall to 1.5% as we have been forecasting. Nonetheless, we doubt that 2.0% will mark …
4th August 2015
Australia’s potential growth rate has probably slowed to around 2.75% from the 3.00% to 3.25% that the Reserve Bank of Australia has assumed for many years. While this may decrease the Bank’s desire to drop rates below 2.0%, at least in the near-term, our …
31st July 2015
It looks as though the Reserve Bank of Australia (RBA) will break this year’s pattern of cutting interest rates at meetings that are followed by the release of the Statement on Monetary Policy by leaving rates on hold at 2.0% at the meeting scheduled for …
29th July 2015
The latest weakening of the Australian and New Zealand dollars to new six-year lows of US$0.73 and US$0.65 respectively are a windfall for the Reserve Banks of Australia and New Zealand who want to boost activity and inflation without throwing more fuel …
27th July 2015
The muted rise in import prices over the past year despite the near-15% fall in the Australian dollar suggests that the weaker dollar won’t boost underlying inflation by as much as the Reserve Bank of Australia is expecting. In fact, we suspect that the …
24th July 2015
The 0.25% reduction in interest rates, to 3.00% from 3.25%, announced by the Reserve Bank of New Zealand today is the second in a series of cuts that we think could take interest rates all the way down to 2.0%. That would be consistent with the dollar …
23rd July 2015
The rise in Australia's headline consumer price inflation in the second quarter will not trouble the Reserve Bank of Australia (RBA), given that it largely reflects a rebound in petrol prices. Instead, further evidence that underlying price pressures are …
22nd July 2015
Some simple but effective analysis proves that pretty much all of the recent rise in Australian business confidence relative to consumer confidence can be explained by the recent weakening in the dollar. Our forecast that the dollar will fall further …
17th July 2015
In a change to our previous forecast, we now expect that the Reserve Bank of New Zealand (RBNZ) will cut interest rates by 0.5%, to 2.75%, at the policy meeting scheduled for Thursday 23rd July and that rates will be cut further to 2.0% by the end of the …
16th July 2015
The continued low level of both headline and core CPI inflation in New Zealand in the second quarter all-but guarantees that the RBNZ will cut interest rates to 3.00% at next week’s policy meeting, and probably to 2.75%, if not below, later in the year. …
While much of the weakness in GDP growth in New Zealand in Q1 was due to the temporary effect of the drought, more recent data suggest that the slowdown is spreading to other sectors. The risks to our forecast that growth will slow from 3.3% last year to …
14th July 2015
Since the recent sharp weakening in both the Australian and New Zealand dollars is being driven by the deteriorating economic outlook for each economy, the depreciating currencies are unlikely to provide a major boost to either GDP growth or inflation. As …
10th July 2015
Even though the Reserve Bank of Australia (RBA) decided to leave interest rates on hold at 2.0% for the second month in a row today and did not provide a clear hint that more cuts lie ahead, we still think that a further weakening in the outlook will …
7th July 2015
Since most of the recent sharp widening in Australia’s trade deficit is because commodity prices have reduced export values rather than due to outright falls in export volumes, net trade probably still made a positive contribution to real GDP growth in …
3rd July 2015
