September 22 – Normalisation complete, what next?

RBA Recap

  • The RBA’s normalisation of policy is now complete, so what’s next?
  • After 4 consecutive 50 basis point hikes, will the RBA continue or is a change coming?
  • Future decisions will be driven by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.

Market Dynamic

  • Market liquidity has tightened and ADIs have started searching for funds again.
  • Term deposit and NCD rates have continued to increase, in line with the shift in yield curve with margins showing signs of widening.
  • The yield curve has flattened, as the front end of the curve prices in rate hikes.

The Australian Economy

  • Good news is bad news and bad news is good news when it comes to the current economic outlook.
  • The consumer has remained resilient and continues to drive the economy forward.
  • Australia has remained somewhat immunised from the Ukraine War, and if anything, it has enhanced our trade balance through strong exports.
  • House prices are falling but the worst is yet to come.
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Curve Team
Nicholas Allan
Senior Associate