News
Wealth Pi Fortnightly Economic Snapshot
Interest Rates
RBA
On the 16th of June the RBA has left the official cash rate unchanged at 4.35 per cent, a move widely expected by economists and market commentators. The RBA’s Statement on Monetary Policy has confirmed today’s decision was unanimous. The decision reflects a deliberate pause to assess the cumulative impact of prior rate hikes on demand and inflation, rather than any signal of a shift in policy direction. Financial conditions have tightened as intended, with money market rates, bond yields, and the exchange rate all moving higher, and there are early signs that consumer spending and the housing market are responding.
The policy bias remains firmly hawkish. Inflation is still too high and the Board is focused on ensuring it does not become embedded once the oil price impulse passes through. The statement explicitly leaves the door open to further rate increases if required, with no easing signal of any kind. The Board will continue to monitor global developments, domestic demand, labour market conditions, and the inflation outlook closely, and is prepared to act accordingly.
Australian Markets
GDP — March Quarter 2026 Australia’s GDP grew 0.3% in the March quarter 2026, bringing annual growth to 2.5%. The standout driver was private business investment, up 6.0%, underpinned by a 16.3% surge in machinery and equipment — the largest quarterly rise in 30 years — reflecting data centre expansion across NSW and Victoria. However, most of this equipment was imported, moderating the net contribution to GDP. On the downside, exports fell 1.1% (the steepest quarterly decline in two years), led by coal and mineral ores, while total imports rose 2.1%, with net trade detracting 0.8 percentage points from growth. The household saving ratio edged down to 6.2% from 7.0%, as spending growth outpaced income growth.
Residential Dwelling Values — March Quarter 2026 The total value of Australia’s residential dwellings rose $315.9 billion (2.5%) to $12.8 trillion in the March quarter 2026, and is now 11.9% higher than a year ago, with continued residential price growth as the primary driver. Growth was uneven across states: Western Australia (+7.2%) and Queensland (+4.6%) recorded the strongest quarterly price gains, while Victoria was the only state to post a decline (-0.3%). On an annual basis, WA led all states with mean dwelling prices up 25.4%, followed by NT (+18.9%) and QLD (+17.3%), whereas NSW (+6.1%) and VIC (+4.1%) saw comparatively modest growth.
Global Markets
The World Bank’s Global Economic Prospects report (11 June 2026) warns that the Middle East conflict is set to slow global growth to its lowest rate since the COVID-19 pandemic, driven by surging energy prices, steeper inflation, and rising borrowing costs. Global growth is forecast at 2.5% in 2026, down from 2.9% in 2025, with two-thirds of economies seeing their outlooks downgraded relative to January. The Strait of Hormuz closure has severely disrupted energy markets, with Brent crude projected to average $94 per barrel this year, 36% above 2025 levels. Fertiliser and food prices are rising in tandem, pushing global inflation from 3.3% in 2025 to an estimated 4.0% in 2026. In a severe downside scenario, growth could fall to 1.3% with inflation reaching 4.4%.
Goldman Sachs Asset Management’s June 2026 Market Pulse (published 3 June) paints a cautious but resilient picture of the global economy. Real GDP growth is expected to slow in the second half of the year as high energy prices weigh on consumption and investment, though recession remains off the base case, with the US forecast at 2.1%, Germany supported by fiscal expansion at 0.7%, and China holding up through export strength at 4.7%. On inflation, core PCE is expected to ease to 2.8% by December as tariff effects fade and wage and shelter pressures cool, while in Europe core inflation is seen peaking at 2.7% before gradually declining. The ECB is expected to deliver two 25bp hikes in June and September, while the Fed and Bank of England are seen on hold through the summer. On commodities, despite the Strait of Hormuz remaining effectively closed, physical Brent prices have pulled back from their early-April highs on reserve releases and softening Chinese demand, with Brent futures seen near $90 per barrel by year-end if energy flows resume within the next month.
Property
Cotality’s May 2026 Home Value Index (released 1 June) signals a clear turning point. The national HVI flatlined at 0% in May, with Sydney and Melbourne values falling as affordability constraints, higher interest rates, and weaker confidence weighed on demand. Research Director Tim Lawless noted the slowdown had been building well before the RBA’s cumulative 75 basis points of hikes this year, the Middle East conflict, and the Federal Budget’s negative gearing and CGT changes — all of which are expected to drive a further pullback in investor activity. Despite the softening, the combined capitals HVI remains 33.7% higher over five years, with Perth, Brisbane and Adelaide up 80–90%, leaving most homeowners in a strong equity position.
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