US industrial production data was much stronger than expected overnight. The RBNZ held its cash rate, but hinted it may have to do a bit more inflation fighting.
In our bonus deep-dive interview, ANZ’s Head of Australian Economics Adam Boyton looks at the contest that will play out between stronger real wages as inflation falls, and higher real interest rates, also on that falling inflation.
5 things to know
US industrial production rose 1.0% in July, beating consensus forecasts for 0.3% growth. ANZ’s Head of G3 Economics Brian Martin thinks the worst of this year’s factory downturn may be over.
Government rebates are powering a US manufacturing investment surge, via on-shoring unleashed by the Inflation Reduction Act and the CHIPs Act.
The Reserve Bank of New Zealand held its Official Cash Rate at 5.5% yesterday, but lifted its forecast OCR track a bit and raised its neutral interest rate estimate. It also raised its house price inflation forecast.
ANZ’s NZ Chief Economist Sharon Zollner says the RBNZ’s higher OCR forecast is creating space for one more hike in November to tackle sticky domestic inflation.
A weak yen is driving strong Japan’s exports and has further weakened imports, helping deliver stronger than expected Q2 GDP growth, ANZ’s Head of FX Research Mahjabeen Zaman says.
Cheers
Bernard
PS: Tomorrow we’ll hear more from the Fed in its FOMC minutes and ANZ’s Group Chief Economist Richard Yetsenga will go deeper into China’s slowdown dramas this week.
