While crazed markets are still pricing Downunder economies off US interest rates, the pivot to more dovish positioning is underway in Australia and New Zealand.
The recent RBA minutes clearly had the yips:
The outlook for global economic growth had deteriorated and posed a key uncertainty. Central banks in several large advanced economies had expressed further resolve in tightening monetary policy to prevent high inflation from becoming entrenched, and this was likely to entail a period of significantly lower growth. High inflation was also placing pressure on real incomes, most significantly in Europe, related to the worsening effects on energy markets following Russia’s invasion of Ukraine. In addition, COVID-19 containment measures and other policy challenges continued to weigh on the outlook for growth in China. Some slowing in the global economy would be important to returning inflation to central banks’ targets, but the potential for a sharp slowing continued to present a downside risk to the outlook.
