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Research about inflation

Hear from QTC’s economists about topical issues important to the global and Australian economies, and financial markets. QTC’s economists write a broad range of articles on the macroeconomy, monetary policy and markets, drawing insights from key resources and economic models. We share research in these areas for our public-sector clients and the investor community.

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Research

RBA cash rate scenarios following its hawkish tilt 

Trent Saunders, QTC Principal Economist
Published: 6 June 2023
5 min read

  

The Australian economy is facing difficult conditions and the outlook remains uncertain. In QTC’s latest Economic Research article, Principal Economist Trent Saunders looks at how economic conditions and the RBA’s cash rate could evolve over the next five years. He also shows how various risks considered by the RBA Board could alter the outlook for interest rates.

Passing the peak: Will the recent slowdown in inflation be sustained?

Trent Saunders, QTC Principal Economist
Published: 8 May 2023
5 min read

   

Inflation appears to have passed its peak, but how quickly will it fall from here? In QTC’s latest Economic Research article, Principal Economist, Trent Saunders looks at the different drivers of inflation to shed light on how persistent it could be and what this means for the outlook for interest rates.

What’s up with Australian inflation? 

Trent Saunders, QTC Principal Economist
Published: 28 September 2022
8 min read

 

Inflation has increased sharply in Australia over the past year, with prices growing at their fastest rate since 1991. This surge in inflation has been underpinned by several factors, including disruptions to global supply chains and a historically tight domestic labour market. However, the importance of these different drivers is not immediately clear. In this note, Trent Saunders takes a closer look at what has driven recent inflation outcomes in Australia. He finds that stronger demand may account for around half of the increase in prices in Australia over the past year.

How tight is the Australian labour market? And what does it mean for wages and inflation?

Trent Saunders, QTC Principal Economist
Published: 6 September 2022
6 min read

    

In this note,  Trent investigates what measure of labour market slack is the best predictor of wages growth and inflation in Australia. I then assess what this means for the outlook over the coming year. I find that the job advertisements-to-unemployment ratio has historically provided the most accurate outlook, though other indicators provide similar insights. These indicators suggest that wages growth will pick up noticeably over the coming year.

Oil prices and inflation: Is Australia facing a crude shock?

Trent Saunders, QTC Principal Economist
Published: 26 April 2022
4 min read

   

Crude oil prices have increased sharply in recent months for Australia, with the price of Brent crude oil peaking in March at its highest level since 2008. In this piece, QTC’s Principal Economist Trent Saunders assesses what higher crude oil prices could mean for inflation over the coming years and answers questions like, will higher crude oil costs flow through to other prices in the economy?

The demand-supply imbalance in the Australian economy

Michael Anthonisz, QTC Chief Economist
Published: 6 April 2022
9 min read

 

COVID-19 was one of the biggest health and economic emergencies of the last century. One of its legacies is how profoundly it has affected the demand for and supply of goods and services. In this piece, QTC’s Chief Economist Michael Anthonisz constructs estimates of demand and supply conditions in Australia. He examines how these have evolved over time and assesses what the implications for inflation might be of the imbalance between the demand and supply.

Assessing the probability of different inflation outcomes

Michael Anthonisz, QTC Chief Economist
Published: 13 September 2021
9 min read

   

Where will inflation be in two years? The RBA forecasts have it back within the two-to-three per cent target band. However, in the current environment, it is far from certain that this will be achieved. QTC’s Chief Economist Michael Anthonisz seeks to quantify the uncertainty over the outlook for inflation by estimating the probability of a range of potential outcomes two years from now.

What to expect when you’re expecting inflation

Trent Saunders, QTC Principal Economist
Published: 28 June 2021
6 min read

   

The outlook for inflation is highly uncertain. While business inflation expectations have increased to their highest level since 2008, other measures have experienced more modest gains. In this article QTC’s Principal Economist Trent Saunders assesses the historical accuracy of various inflation expectations to gauge how much focus we should put on these different economic signals. The results suggest that inflation is likely to reach the bottom of the RBA’s target band in the second half of 2022 and will be slightly above two per cent by the middle of 2023.

Re-assessing Australia’s economic recovery

Published: 29 April 2021
6 min read

       

Australia’s economic recovery has been swift, with leading indicators suggesting that this rapid rate of improvement could continue in the coming months. In this article, QTC’s Principal Economist Trent Saunders uses three scenarios to project what this unexpected strength could mean for the economic outlook and the RBA’s cash rate decisions through to 2030.

What’s down with Australian inflation? 

Trent Saunders, QTC Principal Economist
Published: 25 March 2021
5 min read

 

Inflation has remained stubbornly low in Australia over the past five years, with various cyclical headwinds and structural factors weighing against the stimulatory effects of historically low interest rates. These forces are likely to continue to weigh on inflation over the coming years, prolonging the time until we see an increase in the cash rate.

In this note, we take a closer look at what has underpinned low inflation outcomes to assess where we might need to see increases if inflation is to return to its target range. A key result is that low inflation over the past five years is largely explained by a weak labour market.

2030 Vision: Outlook for the economy and interest rates 

Trent Saunders, QTC Principal Economist
Published: 18 February 2021
6 min read

     

In a world of uncertainty, it has proven difficult to see beyond short-term time horizons. In this article, QTC’s Principal Economist Trent Saunders explores Australia’s long-term path to economic recovery and alternate perspectives on how the economy and interest rates could evolve over the course of this decade. Using three scenarios and projections he takes a look at how the cash rate could move over the decade to 2030.