US consumer confidence slumps into recession territory, Australia’s Budget reveals a surprise tax cut, while future spending plans sit near expectations. Oil prices fall as Ukraine agrees a partial ceasefire.
In our bonus deep dive interview, ANZ Senior International Economist Tom Kenny analyses how the Federal Open Markets Committee’s projections for the US GDP have changed, and how rising uncertainty is hitting the world’s largest economy.
5 things to know in 5 minutes:
Concerns about US growth grew overnight as the Conference Board measure of consumer confidence slumped 7.2 points in March to 92.9. ANZ Economist Bansi Madhavani says the expectations component fell 10 points, into recession territory.
Australia’s Federal Government revealed its Budget last night, proposing a new round of tax cuts. ANZ Head of Australian Economics Adam Boyton says the key headline number is the underlying cash balance, which will be in a deficit of $42.1 billion, or 1.5% of GDP in 2025/26, up from 1% of GDP in 2024/25.
Adam says the initial modest size of the tax cuts means they fit within the envelope of fiscal easing he has been expecting over coming years, meaning it doesn’t change ANZ Research’s expectation for only one more Reserve Bank of Australia rate cut this year.
In the lead up to the Budget, last week’s ANZ Roy Morgan Australian Consumer Confidence measure picked up 0.4 points to 84.2, led by the time to buy a major household item index. ANZ Economist Sophia Angala says the rise did little to offset a weaker month in the series.
Markets in Australia today are focused on February CPI data for clues on where the Reserve Bank of Australia might take rates this year. ANZ Senior Economist Adelaide Timbrell is expecting an annual read of 2.6%, up from 2.5% in January.
Cheers,
Bernard
PS: Catch you tomorrow with what Australia’s February inflation data could mean for the Reserve Bank of Australia’s rate cutting cycle.
