Westpac Institutional and Business

The RBA kept the cash rate on hold as expected with Governor Bullock firmly focused on the upside risks to inflation. We are less convinced that capacity constraints will be an issue for inflation, says Westpac Senior Economists Sian Fenner and Justin Smirk. #WestpacIQ #RBA #Inflation

The September quarter National Accounts showed the economy grew 2.1% in year-ended terms, says Westpac economist Pat Bustamante. Domestic demand stole the show, surging 1.2% in the quarter—a pace we haven’t seen outside the pandemic since the mining investment boom. #GDP #inflation #australianeconomy #RBA #WestpacIQ

Congratulations to Eureka Villages on converting their $180 million of loan facilities into Social Loans, supporting affordable housing for their residents. Eureka also developed a Sustainable Finance Framework which extends to, renewable energy and energy-efficiency upgrades across eligible villages. Westpac acted as Sole Sustainability Coordinator and are proud to partner with Eureka to help deliver meaningful impact for communities nationwide. This milestone transaction underscores the importance of directing capital toward affordable housing solutions and reflects our shared focus on improving housing supply and affordability for Australians. Nell Hutton | Charlotte Plaisant Millecamps | Louise Johnston | Thea Hordern | Jeremy Sweeney | Chris Cahill | Greg Clark

This week’s Friday client note addresses the question of how fast the Australian #economy can grow – the growth rate of so-called “potential output”. Some people (including the #RBA) think this is about 2% annually. We show that this rests on some quite low assumptions about population and participation. And the assumed slow trend in productivity growth has already been blown through by the actual data, as we predicted. We think something more in the 2¼–2½%yr range is more realistic. That means the economy can grow faster without pushing up inflation. There are reasons to be worried about #inflation in Australia. However, the inflation pressures are disproportionately coming from “administered” prices that various levels of government control. If this doesn’t change, the RBA would end up needing to squeeze the Australian consumer once again to hit its inflation target. That’s an unsatisfactory way to run economy policy. There needs to be more commitment at all levels of policymaking to act consistently with Australia’s inflation target. https://lnkd.in/gsnRnmcU

Demand for data centres as critical infrastructure will rise exponentially as uptake of AI continues – and Australia is in the global spotlight as a potential regional hub. How big will the market grow? And what will it take to sustainably meet the huge 24/7 power demands of the future industry? This Westpac IQ infographic considers the big numbers as well as Australia’s advantages and challenges in the data centre boom.

The ABS released the new complete monthly CPI which came in broadly as we expected but it was stronger than the market anticipated, says Westpac Senior Economist, Justin Smirk. Due to a stronger than market expected print we have seen some analysts shift their outlook for inflation and the RBA; but we have taken a different view. #WestpacIQ #Inflation #RBA #CPI