Breaking Market Wire, Asia Pacific

In what we think was another ‘finely balanced’ decision the RBA held the cash rate steady at 4.1% for the second straight month at today’s meeting. As stressed by the RBA interest rates have increased by 400bps since May last year. The tightening in policy is “working to establish a more sustainable balance between supply and demand in the economy”, and the decision to hold firm once again “will provide further time to assess” the impacts of past moves. As our chart shows, this has been the most aggressive policy tightening in several decades with the upswing in interest rates...

For the first time in a while, the more detailed quarterly Australian CPI figures undershot expectations. The downside inflation surprise has seen the AUD dip in knee-jerk fashion towards its recent lows (now $0.6760) with the data creating a bit of doubt in the minds of markets as to whether the RBA will hike rates again at the 1 August meeting. In terms of the data, headline inflation slowed to 6%pa. This is down from 7%pa in Q1 and a peak of 7.8%pa in Q4 2022. The market was looking for headline inflation to slow to 6.2%pa, while the RBA...

Another month, another positive surprise in the Australian labour force lottery. ~32,600 jobs were added in June, led by further strength in full-time employment (+39,300). The positive run means the employment-to-population ratio remains at a record high (64.5%), with the unemployment rate holding steady at a downwardly revised 3.5%. Unemployment is just above its ~50-year lows. Other metrics like underemployment (now 6.4% compared to an average of 8.5% in the years before COVID) and hours worked show that the labour market is still chugging along. Conditions remain tight and hiring demand has (so far) moved in step with the jump...