Thursday: Fed Holds, but Easing Bias Gone

The Federal Reserve left its policy rate unchanged at 3.5‑3.75 percent, but the latest dot‑plot revealed a sharp hawkish turn. Nine of the 18 committee members now project a 25‑basis‑point hike before year‑end, erasing the previous easing bias. Markets reacted with modest moves: the 10‑year Treasury yield rose to 4.456%, the S&P 500 and Nasdaq slipped about 0.4%, while Brent crude hovered near $79 per barrel. Analysts see the split vote as a signal that inflation remains sticky, keeping monetary tightening on the table.

ANZ Research responded by slashing its Australian capital‑city house‑price outlook, forecasting 2 % declines this year and 3 % next year, with Sydney and Melbourne expected to fall around 8 % each. The downgrade follows a sustained slowdown in auction clearance rates, now near 50 %, and a surge in listings that outpaces sales. Meanwhile, the ANZ‑Roy Morgan consumer confidence survey showed a modest rise, yet inflation expectations linger at 6 %, a level RBA policymakers will monitor closely as they consider keeping rates on hold.

Across the region, New Zealand’s first‑quarter GDP is projected to grow 1 % quarter‑on‑quarter, indicating a moderate but not spectacular recovery driven by agriculture, tourism and discretionary spending. In Japan, the Bank of Japan lifted rates to a 31‑year high and announced a taper of government‑bond purchases starting April 2025, reflecting confidence that inflation will settle near its 2 % target. Together, these monetary shifts underscore a global trend toward tighter policy, while ANZ expects a 225‑basis‑point rate cut by late 2027 to revive the Australian housing market, especially in the larger capitals.