Soft Australian GDP figures have increased the chances that 4.35% will stay as the peak for the RBA’s cash rate. Oil prices slumped below US$70/bbl overnight.
In our bonus deep-dive interview, ANZ’s Head of Asia Research Khoon Goh examines the outlook for India’s rupee and the Singaporean dollar next year as the Fed starts cutting and the US dollar weakens.
5 things to know
Oil prices fell 3.5-4% overnight because traders see a slowing global economy reducing demand. They’re also less confident OPEC+ can restrict supply. WTI fell to US$69.69/bbl. The A$ was at 65.61 USc and the NZ$ was at 61.52 USc at 5am Sydney/Melbourne time.
Australian GDP grew 0.2% in Q3 and annualised growth is running at about 1.25%, which is about half its trend rate, ANZ’s Head of Australian Economics Adam Boyton says.
The RBA’s rate hikes and a rising tax rate as a combined share of employee income to 40% from 30% in late 2021 is bearing down on consumer spending, Adam says.
Australia’s economy is now at the most acute part of its slowdown. The end of rate hikes and a tax cut in mid-2024 will fuel a recovery, he says.
The GDP data have increased Adam’s confidence that 4.35% is the peak for the cash rate, which he sees the RBA starting to cut very late next year.
Cheers
Bernard
PS: Look out tomorrow for ANZ Head of G3 Economics Brian Martin’s view on how much the Fed will cut next year, and when it will start.
