Sentiment in both Australia and New Zealand remains more cautious, with a bearish undertone. Merchants indicate that a slowing construction sector and both governments’ focus on reducing inflation are impacting infeed volumes as generally lower consumer spending has a ripple effect. In both countries, there are signs that the slowing economies are softening demand.
Most recently, the Reserve Bank of New Zealand left the official cash rate unchanged at 5.5% but warned it would likely need to stay at this elevated level for some time as global economic growth remains weak. Economists are predicting that there will be no cuts until around May next year.
Australia’s official cash rate is now at 4.1% following an increase of 25 basis points. This tightening reflected the increased upside risk of inflation and an effort to reduce inflationary expectations.
One positive sign is that general cargo freight rates are easing, which will impact inflationary pressure in the short to medium term.