Westpac McDermott Miller Confidence survey at lowest level ever as pessimism bites in NZ
Members commenced their discussion of international developments by noting that inflation had increased further in April and May, and the outlook for global growth had become more uncertain. Many central banks and professional forecasters expected headline inflation to be approaching a peak, but to remain well above central banks’ targets until at least 2023. Measures of underlying inflation remained high in most advanced economies and had not yet shown signs of easing. Persistent supply chain disruptions, tightening labour market conditions and the ongoing recovery in private demand were contributing to strong underlying inflationary pressures. Members noted that the sources of inflation were broadening. Services inflation, which is typically more persistent than goods inflation, had picked up noticeably in advanced economies over the preceding year to be well above pre-pandemic levels. Wages growth remained strong or had increased in a number of advanced economies as labour markets tightened further, but remained lower than inflation. The resulting decline in purchasing power had been substantial for many households, particularly in the United Kingdom and the euro area. This had contributed to sharp declines in consumer sentiment. Household consumption in advanced economies had nevertheless been resilient in the March quarter, notwithstanding the Omicron outbreak, supported by declining rates of household saving. While many advanced economies still had high household saving rates, those in the United States and the United Kingdom had fallen to pre-pandemic levels or below. Members agreed that a key uncertainty for the global economic outlook was how household consumption would respond to lower real wages and rising interest rates. In China, economic activity had slowed sharply in April, with COVID-19 containment measures weighing heavily on consumer spending and manufacturing production in some parts of the country. Chinese authorities had extended further supp tweet at 9:33pm: RBA MINUTES: MAIN ARGUMENT FOR AN INCREASE OF 50 BASIS POINTS WAS THAT THE LEVEL OF INTEREST RATES WAS STILL VERY LOW #News #Forex #RBA tweet at 9:35pm: RBA MONETARY POLICY MEETING MINUTES: MEMBERS NOTED THAT A 25 BASIS POINT OR 50 BASIS POINT RATE INCREASE WOULD LEAVE THE CASH RATE BELOW 1%, WHICH WOULD STILL BE HIGHLY STIMULATIVE, AND THAT FURTHER INCREASES WOULD BE REQUIRED. tweet at 9:33pm: RBA MONETARY POLICY MEETING MINUTES: THE LABOUR MARKET DEMONSTRATED THE ECONOMY’S RESILIENCE THE MOST. tweet at 9:33pm: RBA MONETARY POLICY MEETING MINUTES: INFLATION WAS EXPECTED TO RISE FURTHER BEFORE RETURNING TO THE TOP OF THE 2-3% RANGE IN 2023.