STIR: $-Bloc Markets Softer Over Past Weak Apart From Australia

In the $-bloc, official rate expectations out to July 2025 have mostly softened over the past week. Canada led with a 17bps decline, followed by New Zealand at -12bps, and the US at -2bps. Australia was the outlier, with a modest increase of +4bps. 

• In Canada, easing expectations were supported by September’s CPI data, which showed the slowest annual inflation since February 2021 at +1.6% year-on-year, below the forecast of +1.8% and August’s +2%. Month-on-month, CPI fell -0.4%, below the expected -0.3%.
• In New Zealand, the Q3 CPI also printed lower than expected, bringing annual headline inflation back within the RBNZ’s 1-3% target range for the first time since early 2021. Core inflation measures like the trimmed mean dropped to 2.5% y/y from 3.7%, while the weighted median eased to 2.8% y/y from 3.5%. This likely reassured the RBNZ that price pressures are softening.
• In contrast, Australia’s stronger-than-expected employment report signaled that the labour market’s gradual weakening may have stalled or reversed, reinforcing the likelihood that policy will remain “sufficiently restrictive” for now.
• Looking ahead to July 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.59%, -128bps; Canada (BoC): 2.73%, -152bps; Australia (RBA): 3.85%, -47bps; and New Zealand (RBNZ): 3.23%, -152bps.