Across the Tasman Sea, the Reserve Bank of New Zealand said it would hike rates into economic recession if that's what it took to fight inflation. Data from New Zealand yesterday indicated that the economy is indeed in recession:
The Reserve Bank of Australia have, so far, been more cautious. Governor Lowe has said he'd like to preserve as many of the employment market gains as he can, at the expense of a slower return of inflation to target. The data from Australia yesterday showing surging jobs and a 3.55% unemployment rate is going to test him though:
Earlier this week National Australia Bank jacked up its forest for RBA rate hikes:
ANZ too. it now sees the cash rate peaking at 4.6% by August. ANZ's previous forecast was 4.35%. Says ANZ following the jobs data:
- "While the weakness in Q1 GDP suggests the pace of jobs growth should moderate – and by a lot – over coming months, the general robustness of the labour force survey over 2023 to date is undeniable and suggests some ongoing momentum in the economy"
All this while Australia appears headed into recession. The bond yield curve was already inverted (the spread between 10-year and three-year government bond yields negative) to signal risks of a recession, inverted further after the jobs report.
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The Reserve Bank of Australia next meet on July 4. Next week, though, we'll get the opportunity for some guidance, especially from Deputy Governor Bullock:
