Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
Australian economy braces for weaker growth Data released today reaffirm our view that the Australian economy is on shaky ground. To start with, trade data suggest that net exports will have become a drag on GDP growth in Q3. The trade surplus widened …
5th October 2023
RBNZ’s next move will be down Although the RBNZ will retain its tightening bias, we believe that the official cash rate is at its cyclical peak. All 27 of the analysts polled by Reuters, including ourselves, had expected the Bank to leave the OCR …
4th October 2023
RBA will deliver final rate hike next month While new RBA Governor Michelle Bullock didn’t spring any surprises at her first monetary policy decision today, we think that the Bank will hike interest rates to a peak of 4.35% at its next meeting in …
3rd October 2023
This page has been updated with additional analysis since first publication. RBA will hike despite slower retail sales growth Retail sales lost some momentum in August. However, with sales volumes still running above their pre-pandemic trend, that …
28th September 2023
This page has been updated with additional analysis since first publication. Resurgent price pressures raise risk of tighter policy With Australia’s disinflationary process stalling, there’s a growing risk that the Reserve Bank of Australia will resume …
27th September 2023
This page has been updated with additional analysis since first publication. Strong pickup in growth puts rate hikes back on the table The unexpectedly strong rebound in activity last quarter means that the RBNZ may well judge it has more work to do. All …
20th September 2023
RBA’s pause to continue Although the RBA won’t be dropping its guard in the fight against inflation anytime soon, we still believe its tightening cycle is at an end. The minutes of the RBA’s September meeting showed that the Board did once again discuss …
19th September 2023
This page has been updated with additional analysis since first publication Firm rebound in employment won't move the needle for the RBA Although job creation rose at a breakneck pace last month, it was matched by an equally forceful expansion of the …
14th September 2023
Net trade set to become a drag on Q3 GDP growth Following the sizeable 0.8%-pts boost to GDP growth in Q2, the July trade figures suggest that net exports will provide a drag in the third quarter. The trade surplus fell from a downward-revised $10.3bn in …
7th September 2023
This page has been updated with additional analysis since first publication. Stronger-than-expected GDP growth won’t prompt RBA to resume rate hikes While GDP growth held up better last quarter than the RBA had anticipated, we doubt this will encourage …
6th September 2023
RBA is done tightening and will cut rates earlier than most expect The RBA retained its tightening bias when it kept interest rates unchanged at 4.10%, but we think the Bank’s next move will be a rate cut, perhaps as early as the first quarter of next …
5th September 2023
This page has been updated with additional analysis since first publication. Resilience of business investment poses upside risks to growth We don’t think the ongoing strength in private fixed investment will last. However, the balance of risks to our …
31st August 2023
This page has been updated with additional analysis since first publication. Rapid fall in inflation may prompt earlier rate cuts The sharp fall in inflation in July confirms that the RBA is done tightening and raises the chances that the Bank will start …
30th August 2023
This page has been updated with additional analysis since first publication. RBA will look past upswing in retail sales We don’t believe that the healthy uptick in retail sales in July represents a second wind for the Australian consumer. Accordingly, …
28th August 2023
This page has been updated with additional analysis since first publication. Unemployment rate ticks higher A boost to the labour supply is helping to take the heat out of Australia’s tight labour market. Accordingly, we’re sticking with our view that the …
17th August 2023
RBNZ signals extended pause All 29 of the analysts polled by Reuters, including ourselves, correctly predicted the RBNZ’s decision to leave the OCR unchanged at 5.50%. The minutes of the meeting reiterated the RBNZ’s tightening bias. The Committee appears …
16th August 2023
This page has been updated with additional analysis since first publication . Underwhelming wage growth bolsters case for RBA to stay put The sluggish pace of wage growth in Q2 reinforces our view that the Reserve Bank of Australia won't lift interest …
15th August 2023
Net trade buoyed GDP growth in Q2 The rise in the trade surplus to $11.3bn in June, from $10.5bn in May, was broadly in line with what most had expected (Refinitiv Consensus: $11bn, CE: $11.5bn). Although exports of goods and services fell by 1.7% in …
3rd August 2023
This page has been updated with additional analysis since first publication . Labour market will slacken in earnest before long Although New Zealand’s unemployment rate rose slightly last quarter, the labour market remains very tight by historical …
1st August 2023
RBA stands pat The RBA’s decision to leave its cash rate unchanged at 4.10% means that its almost certain that our forecast for a terminal rate of 4.60% won’t come to fruition. Ahead of today’s meeting, 20 out of 36 analysts polled by Reuters, including …
This page has been updated with additional analysis since first publication. Retail sales soften anew The sharp decline in retail sales in June suggests that sales volumes fell for a third consecutive quarter in Q2. With the RBA sounding increasingly …
28th July 2023
This page has been updated with additional analysis since first publication. RBA will deliver at least one more rate hike The faster-than-expected slowdown in inflation in Q2 may convince the RBA that it has done enough to rein in price pressures. …
26th July 2023
This page has been updated with additional analysis since first publication . Labour market continues full steam ahead With the labour market still running red hot, we think the Reserve Bank of Australia has more work to do. Accordingly, we’re sticking …
20th July 2023
This page has been updated with additional analysis since first publication. Headline inflation moderates, but underlying inflation remains elevated Although price pressures are dissipating, they could prove stickier on the way down than we anticipate. As …
18th July 2023
RBA softens tone, but further rate hikes remain likely The minutes of the RBA’s July meeting showed that its decision to hit pause was far from a foregone conclusion. Indeed, the Board did consider the option of a 25bp hike alongside the option of leaving …
RBNZ leaves rates unchanged The RBNZ’s decision to leave its official cash rate on hold at 5.50% was widely expected. In fact, all 25 analysts polled by Reuters, including ourselves, had anticipated the pause. The minutes of the July meeting reinforce our …
12th July 2023
Net exports will cushion GDP growth in Q2 The rise in the trade surplus, to $11.8bn in May from $10.5bn in April, was stronger than most had anticipated (Refinitiv Consensus: $10.5bn, CE:$10.9bn). Exports of goods and services rose by a solid 4.4% in …
6th July 2023
Tightening cycle not over yet The RBA’s decision to keep rates unchanged today suggests that interest rates may not rise all the way to 4.85% as we currently expect, but further tightening still seems likely. Today’s decision was a very close call: 15 …
4th July 2023
Slowdown in inflation not fast enough to prevent further rate hikes The sharp fall in inflation in May raises the risk that Reserve Bank of Australia will not raise any further at the upcoming meeting in July, but we still think that mounting upside risks …
28th June 2023
RBA will keep hiking to 4.85% The minutes of the RBA’s June meeting largely reaffirmed the Bank’s pivot to a more hawkish stance. To be sure, the Board did discuss the option of leaving rates unchanged, given the ongoing fall in households’ real …
20th June 2023
Tight labour market will prompt more monetary tightening With the labour market still firing on all cylinders, we’re happy with our forecast that the Reserve Bank of Australia will lift the cash rate all the way to 4.85% by September. The 75,900 rise in …
15th June 2023
Recession will drive RBNZ to cut rates by Q4 With New Zealand now in recession, we’re more confident that the RBNZ will start cutting rates by Q4 of this year itself. The -0.1% q/q contraction in production GDP was in line with what most, including …
14th June 2023
Net trade to boost GDP in Q2 The rise in the import bill in April likely overstates the strength of domestic demand in Australia. The decline in the trade surplus to $11.2bn in April, from a downwards-revised $14.8bn in March, was sharper than most had …
8th June 2023
Flagging productivity raises risk of higher terminal interest rate Although the economy is clearly slowing, dismal productivity gains raise the risk that the RBA will have to raise interest rates above the 4.35% peak we have pencilled in. The 0.2% q/q …
7th June 2023
RBA will deliver another 25bp hike next month The Reserve Bank of Australia lifted the cash rate by 25bp today and the hawkish tone of the statement suggests that the risks to our terminal rate forecast of 4.35% are tilted to the upside. Today’s decision …
6th June 2023
Largest minimum wage hike in 41 years adds pressure on RBA The 5.75% increase in the minimum wage is the largest on record and adds to the case for the RBA to raise interest rates further. The Fair Work Commission today announced that both the minimum …
2nd June 2023
Renewed acceleration in inflation will prompt further RBA tightening With inflation set to overshoot the RBA’s forecasts this quarter, the Bank will continue to increase interest rates, perhaps as soon as next week. According to the Monthly CPI …
31st May 2023
Weak consumption adds to case for RBA pause The weakness in retail sales in April supports our view that the Reserve Bank of Australia is done hiking interest rates. Retail sales values were unchanged last month, a weaker result than the analyst consensus …
26th May 2023
RBNZ signals tightening cycle is at an end The RBNZ slowed the pace of tightening this month, while signalling that its tightening cycle was at a close. The Bank’s decision to hike its official cash rate by 25bp, to 5.50%, was correctly predicted by 20 …
24th May 2023
Labour market will loosen further The labour market is showing signs of cooling, reinforcing our view that the RBA’s tightening cycle is over. The 4,300 fall in employment in April was much weaker than most had anticipated (Refinitiv Consensus: +25k, …
18th May 2023
Sluggish wage growth suggests RBA is done tightening The Q1 wage price index showed that quarterly wage gains were a bit softer than the RBA had anticipated which supports our view that the Bank won’t raise interest rates any further. The 0.8% q/q rise in …
17th May 2023
RBA retains its tightening bias The minutes of the RBA’s May meeting were on the hawkish side, but we still think that the Bank’s tightening cycle is already over. Although the Board discussed the option of leaving the cash rate unchanged, it ultimately …
16th May 2023
Net exports won’t have boosted GDP in Q1 The wide trade surplus belies the negligible contribution made by net exports to Q1 GDP. The widening of the trade surplus to $15.3bn in March, from an upwards-revised $14.2bn in February, was in contrast to what …
4th May 2023
Weakness in consumption growth will deter RBA from further rate hikes While retail sales values rose at a decent pace in March, we estimate that sales volumes fell the most since 2021’s lockdowns last quarter and that weakness has further to run. The 0.4% …
3rd May 2023
Tight labour market raises the risk of outsized RBNZ hike The strength of New Zealand’s labour market last quarter poses upside risks to our view that the RBNZ will lift rates by 25bp later this month. The 0.8% q/q rise in employment in Q1 was stronger …
2nd May 2023
Tightening cycle over but rates will only be lowered in Q2 2024 The Reserve Bank of Australia retained its tightening bias when it lifted the cash rate by 25bp at today’s meeting, but we suspect that it won’t raise interest rates any further over the …
Inflation will only return to target in H2 2024 While inflation is moderating slightly faster than the RBA had anticipated, price gains remain far too strong to be consistent with the Bank’s 2-3% inflation and we’re sticking to our forecast of a final …
26th April 2023
Price pressures show signs of easing Amid ongoing concerns that non-tradables inflation will settle at an uncomfortably high level, we still expect the RBNZ to push ahead with one final 25bp rate hike in May. The 1.2% rise in consumer prices last quarter …
19th April 2023
Inflation concerns will prompt a final 25bp rate hike in May The minutes of the RBA’s April meeting reinforce our view that the decision to leave rates on hold did not signal an end to the Bank’s tightening cycle. Indeed, the Board did discuss the case …
18th April 2023
The strength in March’s labour market data will probably prompt the Reserve Bank of Australia to deliver a final 25bp rate hike next month, but unemployment will rise before long. The 53,000 rise in employment last month was much stronger than most had …
13th April 2023