Australia and New Zealand Weekly

Westpac analysts warn that headline economic data is currently misleading, as underlying inflation and a data-centre investment boom suggest a need for higher interest rates in Australia and New Zealand despite softer headline prints.

Key Takeaways

• 1.The RBA is looking past softer headline inflation data in April to underlying trends and energy price pass-through risks, maintaining a hawkish bias.
• 2.The RBNZ signal a likely shift toward rate hikes by the end of 2026 (projected 2.84%), with internal and external committee members split on immediate action.
• 3.Australia's AI boom is driving a surge in CAPEX via data centres, which tripling in Q1 and creating a temporary drag on measured productivity during the build phase.

Table of Contents

• Economic Insight
• The Week That Was
• Focus on New Zealand
• Forecast changes
• Australia: May Cotality Home Value Index
• Australia: Q1 2026 Company Profits
• Australia: Q1 Inventories
• Australia: Q1 Current Account Balance
• Australia: Q1 Net Exports
• Australia: Apr Dwelling Approvals
• Australia: Q1 GDP
• Australia: Apr Goods Trade Balance
• New Zealand: Apr Building Consents
• New Zealand: Q1 Building Work Put in Place
• US: May employment report
• For the Week Ahead
• Looking Further Ahead
• Economic & financial forecasts

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