Episode Details

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Kia ora.

Welcome to Thursday’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 it now looks like we are going to get an international rush of interest rate hikes before the end of the year - in New Zealand, in Australia, in Japan, in the US and in Canada - after the pre-election pause while likely raised the pressure because inflation's rises didn't pause.

As widely expected, the US Fed kept its 4% policy rate unchanged at at today's meeting on a vote of 10-2. (The two dissenters wanted a rise to weigh against inflation.) Recall they have a rising inflation rate, currently running at 3.7%. But markets now expect a December hike once their elections are out of the way.

Immediately after the Fed decision, the US Treasury yields rose, the S&P500 eased, and the USD rose. But all changes were marginal at best.

Meanwhile there was a small bounce-back in US mortgage applications last week after the prior week's sharp decline. That came as benchmark home loan interest rates eased slightly too.

The US goods trade balance got worse in September to -US$135 bln (up from -US$82.7 bln in September 2025), not only from August, but also worse than analysts had expected and a record deficit apart from in the January-March 2025 rush to beat Trump tariffs due in April 2025. Exports were up +12.5% from a year ago, imports up +27.8% on the same basis.

US inventories are rising too, both wholesale (up +7.4% in a year) and retail (up +4.9%). Part of this will no doubt be because of the surge in imports.

The US recorded another fall in crude oil inventories last week, down -1.9 mln bbls, more than the no-change expected. But there strategic reserves remained little-changed at very low levels.

The Bank of Canada raised its policy rate by +25 bps overnight to 2.5%. And there are calls for another rate hike to keep inflation at bay, currently running there at 3.1%

In Malaysia, they reported that September producer prices were +12% higher than a year ago, a faster rise than was expected

India's industrial production in September eased back to a +6.7% expansion, a lower gain than anticipated.

In Britain they have a special tax on banks, which has become a bit of a political football. A Cons