Weekly Updates

In Australia, the RBA increased the cash rate by 25bps to the previous cycle high of 4.35%, as expected, with further decisions remaining data- and event-dependent. The RBA has revised its near-term inflation projection upwards, but continues to expect a return to the mid-point of the target range over the medium term, subject to one more rate hike and the US-Iran conflict being resolved quickly.

In Australia, annual headline CPI surged in March, though slightly less than expected, while annual trimmed mean inflation drifted further away from the target band in Q1. Cotality home price growth slowed nationwide, with stronger declines in Sydney and Melbourne and further solid increases in less populous mainland capital cities.

In Australia, the S&P Global flash PMIs pointed to renewed, albeit marginal, expansion in April. The Westpac leading index suggested that economic growth could slow below trend in the months ahead. The 2024-25 government finance statistics confirmed that the Aussie consolidated fiscal indicators remain in check.

Domestically, the NAB business report saw steady business conditions in March but a slump in confidence, while the Westpac consumer sentiment survey saw confidence drop to the lowest levels since April 2020. Consumer inflation expectations jumped to the highest level since 2022 in April.

In Australia, household spending saw a moderate increase in February, ahead of the escalation in the Middle East. The Melbourne Institute inflation gauge suggested an acceleration in consumer price growth in March, while ANZ-Indeed job ads declined.

In Australia, the RBA minutes confirmed that a split in the vote for a cash rate hike in March was about the timing, not the direction of monetary policy. Cotality average home prices rose further in March, though Sydney and Melbourne saw declines, which followed a bounce in dwelling approvals in February driven by units and townhouses.