Westpac

According to the RBNZ the economy is now in a position of excess capacity, encouraging price- and wage-setting to adjust to a lowinflation economy.

Although momentum in domestic demand has turned out a bit weaker than the RBA expected, in September the RBA contemplated scenarios warranting both tighter and looser financial conditions.

Business sentiment has continued to charge higher as interest rate pressures ease, but activity remains soft for now.

Key insights from the week that was.

Attractive growth opportunities in Asia will support currencies and yields despite a narrowing rate differential with the FOMC.

Key insights from the week that was.

The US Federal Reserve has chosen a ‘sprint first, then dawdle’ approach to rates normalisation. Dawdling makes sense given the neutral rate is uncertain and probably higher than pre-pandemic.

New Zealand’s GDP fell by 0.2% in the June quarter. The result wasn’t as weak as expected, and will ease concerns that the economy might have been taking a turn for the worse.

50bps delivered and another 50bps seen by year end by the FOMC.