Analysts at BBH noted the divergence between the two Antipodean Central
Banks.
Key Quotes:
"The Reserve Bank of Australia next meets on December 1. It left rates steady at 2.0% earlier this week, but some forecasters had expected a 25 bp cut. Governor Stevens left the door open for further easing in recent comments, but also noted that “prospects for an improvement in economic conditions had firmed a little.” The next meeting will likely be a close call. Right now, about a third of the analysts polled look for a 25 bp cut. Strong domestic credit growth may have bought the RBA some time, but further softness in the data would likely push it into cutting rates again.
The Reserve bank of New Zealand next meets on December 10. Markets widely expect it to cut rates by 25 bp to 2.50% then. Recent data support this view. The Q3 employment report was on the soft side, with the unemployment rate holding at 6.0% only because of the drop in participation rate. There was also a terrible milk auction earlier this week, along with a wider than expected September trade balance, which doesn’t help the outlook."
Key Quotes:
"The Reserve Bank of Australia next meets on December 1. It left rates steady at 2.0% earlier this week, but some forecasters had expected a 25 bp cut. Governor Stevens left the door open for further easing in recent comments, but also noted that “prospects for an improvement in economic conditions had firmed a little.” The next meeting will likely be a close call. Right now, about a third of the analysts polled look for a 25 bp cut. Strong domestic credit growth may have bought the RBA some time, but further softness in the data would likely push it into cutting rates again.
The Reserve bank of New Zealand next meets on December 10. Markets widely expect it to cut rates by 25 bp to 2.50% then. Recent data support this view. The Q3 employment report was on the soft side, with the unemployment rate holding at 6.0% only because of the drop in participation rate. There was also a terrible milk auction earlier this week, along with a wider than expected September trade balance, which doesn’t help the outlook."
