Weekly Updates

In Australia, GDP growth in Q1 disappointed a little, while the current account deficit widened to a record level. Dwelling approvals fell for the second month in a row in April, while a strong rise in exports pushed the trade balance back into surplus and credit growth remained resilient.

At home, the headline CPI inflation for April surprised to the downside, but trimmed mean inflation climbed further. Household spending fell in nominal terms in April, dragged down by the fuel excise cut. Private sector capex surged in Q1, supported by investment in data centres.

At home, RBA minutes indicated little chance for monetary policy tightening in June. The April labour force survey came out much weaker than expected. Offshore, FOMC minutes confirmed increasing hawkishness ahead of the new Chair taking his place on the committee.

In Australia, the Commonwealth budget showed slightly better fiscal outcomes compared to MYEFO. NAB business conditions deteriorated to the second lowest level since 2020 in April, while business confidence ticked up but remained bleak.

In Australia, the RBA increased the cash rate by 25bps to the previous cycle high of 4.35%, as expected, with further decisions remaining data- and event-dependent. The RBA has revised its near-term inflation projection upwards, but continues to expect a return to the mid-point of the target range over the medium term, subject to one more rate hike and the US-Iran conflict being resolved quickly.

In Australia, annual headline CPI surged in March, though slightly less than expected, while annual trimmed mean inflation drifted further away from the target band in Q1. Cotality home price growth slowed nationwide, with stronger declines in Sydney and Melbourne and further solid increases in less populous mainland capital cities.