e still too easy: mortgage lending jumped 9.5% in Q4 and investment lending hit a record. Meanwhile, New Zealand looks to be in a different phase – the kiwi is steady near $0.606, and a hold at 2.25% next week is widely expected after 225 basis points of cuts over the past year.
Why should I care?
For markets: Rate expectations are doing the heavy lifting.
When traders price more tightening in Australia than in the US, the aussie usually benefits – and that can ripple through local assets. Higher expected rates tend to pressure rate-sensitive areas like property and highly leveraged companies, while supporting bank margins. The punchy Q4 lending numbers also suggest housing demand could keep inflation stickier than policymakers want.
The bigger picture: Small economies can swing from cuts to hikes fast.
Australia and New Zealand show how quickly the inflation fight can change shape. Australia’s mix of capacity constraints and strong housing credit is the classic setup for “higher for longer”. New Zealand, despite big cuts, still faces the risk that domestic demand and housing finance reaccelerate – forcing the central bank back into tightening mode sooner than anyone would like.