February 2024The DB ANZOMMOAustralia / New Zealand One Minute Macro OverviewPhil O’Donaghoe | Chief Economist | philip.odonaghoe@db.comDeutsche BankResearchIMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. MCI (P) 041/10/2023. UNTIL 19th MARCH 2021INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Distributed on: 18/02/2024 23:58:09 GMT7T2se3r0Ot6kwoPaResearchDeutsche BankPhil O’Donaghoe | Chief Economist | philip.odonaghoe@db.com119/02/2024 07:12:372010 DB Blue templatePolicy OutlookRBA▪No more hikes, cuts in Q3. We think the current RBA cash rate of 4.35% will be the terminal rate this hiking cycle. Our base case is for 50bps of cuts this year, with 25bp cuts in August and November, for an end-year cash rate of 3.85%. We assume a further 100bps of cuts in 2025 to 3.1%, i.e, further easing towards our estimate of neutral nominal cash at 2½%. We think near term risks are skewed to an earlier start to policy easing. A May rate cut is possible. RBNZ▪No more hikes, cuts in Q3. We think the current RBNZ cash rate of 5.5% will be the terminal rate this hiking cycle, that the economy re-entered recession in H2-2023, and the RBNZ will be cutting almost a year earlier than its current guidance suggests. Specifically, our baseline is for the first RBNZ rate cut in Q3-2024. We assume 75bps of cuts in H2-2024, with 25bp rate cuts at the August, October and November meetings, for an end-year OCR at 4.75%. Risks are skewed to the RBNZ cutting later than we expect.ResearchDeutsche BankPhil O’Donaghoe | Chief Economist | philip.odonaghoe@db.com219/02/2024 07:12:372010 DB Blue templateKey Forecasts202320242025AustraliaGDP2.01.52.0Headline inflation4.13.32.9Unemployment3.84.64.3Policy rate4.353.853.10New ZealandGDP0.70.51.7Headline inflation4.72.42.0Unemployment4.04.74.3Policy rate5.504.754.00DB's Australia/NZ Macro Forecasts**Year-average for GDP, year-end for core inflation, unemployment & the policy rateDec-23Mar-24Jun-24Sep-24Dec-24Mar-25Jun-25Sep-25Dec-25AustraliaGDP1.61.41.31.61.61.82.02.02.0Headline inflation4.13.73.63.13.33.03.02.92.9Trimmed mean inflation4.23.73.32.82.72.62.62.62.6Unemployment3.84.24.34.44.64.54.34.34.3Policy rate4.354.354.354.103.853.353.103.103.10New ZealandGDP-0.10.30.00.61.01.31.61.82.0Headline inflation4.13.73.63.13.33.03.02.92.9Unemployment4.04.34.64.74.74.54.54.34.3Policy rate5.505.505.505.254.754.504.254.004.00*Year-ended for GDP, inflation and unemployment, % for policy rateDB's Australia/NZ Macro Forecasts*ResearchDeutsche BankPhil O’Donaghoe | Chief Economist | philip.odonaghoe@db.com319/02/2024 07:12:372010 DB Blue templateAustraliaResearchDeutsche BankPhil O’Donaghoe | Chief Economist | philip.odonaghoe@db.com419/02/2024 07:12:372010 DB Blue templateAustralia GDP at 2.1%yoy in Q3-2023. We see growth slowing to 1½%yoy by end 2024, about ¼ppt lower than RBA’s Feb-SMP forecastSource: Deutsche Bank, ABSSep-23, 0.2%qoqSep-23, 2....
