Economic Update December 2023

Rates high, growth low

The global economy will continue to be under pressure in 2024. While some economies are more likely than others to pull off a soft economic landing, recession risks remain. Central banks will retain tight policy settings until inflation moves sustainably toward their targets before easing relatively cautiously. Investors will remain relatively defensive as they await a turn in the cycle.

In Australia, it was clear to most that the Reserve Bank of Australia (RBA) would be forced to recommence its tightening cycle at its November meeting as the CPI print implied a “material” miss against its August forecasts. At its December meeting, the RBA noted it had “limited information” since November to justify a follow-up hike, highlighting that there are “encouraging signs” of goods inflation globally that may foreshadow the same in Australia.