The RBNZ has a more intense inflation and labour market problem to counter than its Australian counterpart
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We're on the verge of Bank Holiday around the world, but there's still much to talk about as some central banks made interest rate decisions and the US jobs market data go public tomorrow. This week, we're already past RBA and RBNZ rate decisions. Seeking for an insightful view on both, we asked Craig Erlam from Oanda, to comment on the RBA decision and talk about it amid RBNZ decision, which has turned out to be a surprising hike. Do these two CB choose a bit different paths in a way?
Craig Erlam (Oanda): The RBNZ has a more intense inflation and labour market problem to counter than its Australian counterpart which is why it was forced to continue hiking aggressively rather than having the flexibility to pause. What this ultimately means is the central bank is likely to push New Zealand into recession while there's still hope that can be avoided in Australia. Of course, this is a constantly evolving situation and the RBA may feel there's a little more to do - and has left the door open to that - but as things stand, the two are now on different paths.
Of course, this is a constantly evolving situation and the RBA may feel there's a little more to do - and has left the door open to that - but as things stand, the two are now on different paths
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