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ANZ Research highlights a softening economic outlook across Australia and New Zealand, characterized by sluggish domestic consumption and shifting monetary policy expectations. In Australia, GDP growth of 0.3% in Q1 2026 was supported by data center investment but undermined by a 0.7% decline in real per capita household incomes and nearly flat discretionary spending. Consequently, ANZ expects the RBA to maintain the cash rate at 4.35% as unemployment hits 4.5% and forward business orders decline. Internationally, ANZ has pushed back its forecast for Federal Reserve easing from September to December 2026, citing hawkish shifts from Fed officials and record-low US consumer sentiment. Geopolitical developments remain a critical focal point, particularly regarding negotiations to reopen the Strait of Hormuz, which directly impacts Murban crude prices and New Zealand’s refined fuel import costs. Finally, global interest rate projections indicate markets are pricing in continued tightening across most monitored jurisdictions, with Australian rates projected to reach 4.59% by December 2026 and New Zealand rates hitting 3.58% by August 2027.

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