You will recall that Australia’s October monthly CPI indicator from the Australian Bureau of Statistics came in below market expectations at 4.9%/yr (versus the consensus of 5.2%/yr). There were a number of factors which messed with the data, as I discussed in a previous show.
According to CBA, other surveys also suggest that trimmed mean CPI in Q4 23 is unlikely to be stronger than the RBA’s ~1.0%/qtr forecast.
But these monthly numbers are flaky, because the critical services price movements are not captured until the quarterly series which is due out in January.
As I discussed in my earlier show, the problem is the last mile problem – in that the last part of getting inflation down towards the target is the hardest, especially when then RBA now has a 2.5% central target, and as in the US data out yesterday, its services inflation which is driving the numbers as goods inflation eases back.
On this theme, Statistics New Zealand on Wednesday released its new monthly inflation gauge, which captures around 45% of the CPI basket.
The conclusion of all this, is the partial monthly numbers may well deceive, and should be taken with a truck load of salt. When the quarterly numbers land later then check out the services components. Goods price inflation may be coming under control, but services is not. And within that, watch the rental and housing sector in particular.
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
The Reserve Bank’s Monetary Policy Committee held the Official Cash Rate at 5.5% Wednesday in Wellington. This was as expected by most economists. But the central bank has been spooked by stronger near-term growth that’s being driven by the return of international students and immigrants after the pandemic.
As a result, there was a significant surprise, raising its forecasts for the OCR — implying a greater chance of an increase — and predicting no reduction until mid-2025.
This was the final policy meeting of the year and said it will hike them in 2024 if inflation doesn’t decelerate fast enough.
“We are confident we are restrictive with our monetary policy stance now and that provides us the ability to wait, to watch the data, but certainly highlight our willingness to move if we have to,” Governor Adrian Orr told reporters. “We are showing an upward bias to the interest rate, but it’s not a probability.”
Markets are out of kilter with the RBNZ, as Investors have in recent weeks ramped up bets that central banks globally, including the RBNZ, will pivot to rate cuts in the first half of 2024 as price pressures wane. But Orr said the RBNZ is concerned that inflation has been outside its 1-3% target band for so long, and that record immigration and a housing market recovery are adding to upside risks.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
Kiwi’s Yet To See Higher Rates Thanks To Migration?
The Reserve Bank’s Monetary Policy Committee held the Official Cash Rate at 5.5% Wednesday in Wellington. This was as expected by most economists. But the central bank has been spooked by stronger near-term growth that’s being driven by the return of international students and immigrants after the pandemic.
As a result, there was a significant surprise, raising its forecasts for the OCR — implying a greater chance of an increase — and predicting no reduction until mid-2025.
This was the final policy meeting of the year and said it will hike them in 2024 if inflation doesn’t decelerate fast enough.
“We are confident we are restrictive with our monetary policy stance now and that provides us the ability to wait, to watch the data, but certainly highlight our willingness to move if we have to,” Governor Adrian Orr told reporters. “We are showing an upward bias to the interest rate, but it’s not a probability.”
Markets are out of kilter with the RBNZ, as Investors have in recent weeks ramped up bets that central banks globally, including the RBNZ, will pivot to rate cuts in the first half of 2024 as price pressures wane. But Orr said the RBNZ is concerned that inflation has been outside its 1-3% target band for so long, and that record immigration and a housing market recovery are adding to upside risks.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Today I want to dissect some the latest data from New Zealand. In summary, inflation and costs of living continue to bite, more households are in financial distress, inward migration is at a record high, but the property market remains in the doldrums. Worth thinking about ahead of the general election at the weekend.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Today I want to dissect some the latest data from New Zealand. In summary, inflation and costs of living continue to bite, more households are in financial distress, inward migration is at a record high, but the property market remains in the doldrums. Worth thinking about ahead of the general election at the weekend.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Today I want to dissect some the latest data from New Zealand. In summary, inflation and costs of living continue to bite, more households are in financial distress, inward migration is at a record high, but the property market remains in the doldrums. Worth thinking about ahead of the general election at the weekend.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
An in-depth look at New Zealand, as the Reserve Bank holds rates at 5.5% and underscores the need to hold rates higher for longer. Plus, the inquiry into Banking Competition fires up, and the Chief statistician says people do not want to talk to them! Wonder why?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
The New Zealand Cash Rate Is Held, But No Rate Cuts Can Be Expected Yet!
An in-depth look at New Zealand, as the Reserve Bank holds rates at 5.5% and underscores the need to hold rates higher for longer. Plus, the inquiry into Banking Competition fires up, and the Chief statistician says people do not want to talk to them! Wonder why?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The latest from REINZ tells the story of ongoing weakness in New Zealand Property, even if they try to spin the results to argue people should be meeting the market, which was down again!
The RBNZ Team lead by Adrian Orr was questioned in Parliament today, and we got more insight into the trajectory of rates, and the impact on households, with the debt servicing ratios set to rise higher than before the GFC! There was a sharp intake of breath!
In addition, there was a concession to the fact that if lending had been tighter, QE and money printing more controlled, then inflation would be lower. Is this the first time a Central Banker admitted this?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
