December 22 – Expect the Unexpected, Expect the Extreme

RBA Recap

  • The RBA lifted the cash rate another 25bp to 3.10% at the December meeting.
  • There was little change in the accompanying statement with only a few insights into any change of narrative in the new year.
  • Looking back over the last 12 months and monetary policy is a long way from where, economists, market commentators and market pricing were suggesting.
  • Will we see a similar a similar phenomenon over the year ahead?

Market Dynamics

  • Competition for funding heated up heading into the holiday break.
  • Smaller ADIs are having to go above and beyond to sure up funding.
  • The shorter end of the Curve is seeing very rare margins and rates. But how long will the squeeze last?

The Australian Economy

  • The Australian economy experienced a robust resurgence over 2022.
  • Activity accelerated as restrictions eased back and a more normal operating environment resumed.
  • Data over the last month suggests that the speed of expansion has peaks and activity is under pressure from rising rates and inflation.
  • What can we expect from the economy going into the new year?


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Curve Team
Jack Pedersen