Episode Details

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Kia ora.

Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from interest.co.nz.

Today we lead with news 

central banks are being forced to acknowledge that their measured approach to inflation control over most of 2026 just hasn't worked and they need a refreashed, tougher approach.

Locally this week, the highlight will be Wednesday's full RBNZ Monetary Policy Statement. With inflation running at 4.1% and rising (it has risen every quarter since December 2024), every observer and financial markets are expecting a full +25 bps rise to 2.75%. The next review is on October 28 which is just over a week before the general election. So we will see just how focused the Breman RBNZ really is on weighing against inflation, even in the face of political pressure. We will get the next CPI result on October 22, and that will be a telling indicator. Financial markets currently price in another +25 bps OCR rise then, at a 60% chance.

We will also get many updates about the local August residential reals estate market, and we will get July building consent data.

In Australia, there will residential real estate updates too, building consent data, and they will reveal their Q2-2026 GDP expansion rate, expected to be up +1.6% from a year ago, much lower than the Q1-2025 expansion of +2.5%.

In the US, the developing conflicts between the Fed's desire to rein in inflation, and the Trump Administration's actions to ignore that threat and to try and push down interest rates will increasingly be watched by markets. There will also be PMIs out pointing to economic activity changes, and the week will end with their August non-farm payrolls report which is currently expected to show a very minor +45,000 jobs expansion.

In Canada there will be a rate review although no change is expected from the current 2.25%. They have a 3% CPI level, and a major challenge from their obnoxious neighbour to contend with.

Japan will release a broad range of economic reports, including the latest industrial production, retail sales, consumer confidence, housing starts and household spending data.

India will release GDP data (expect +7.1%). Malaysia will review its policy rate, but no change is expected from the present 2.75% And there will be PMIs everywhere. And that includes China.

Over the weekend, Japan reported a 2.4% jobless rate in July, their lowest in more than a year and their second lowest since before the pandemic.

And it seems Japan can still surprise. Births from January through June were 342,068, up +0.8% (+2,788 more) from the same period in 2025. It was their first rise for the first half of the year in 11 years.

Malaysia said producer prices there rose at a very fast +9.7% rate in July, their fastest since the pandemic and before that since early 2017.

India reported that its industrial production eased back from a +9.5% expansion rate in June to +7.3% in July. But this was still a better result than anticipated. Meanwhile, Indian bank loan growth has stayed extraordinarily high, up +18.3% from a year ago.

In China, mirroring the