Australia suddenly in a tough spot

<p>Kia ora,</p><p>Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>Today we lead with news high and rising inflation in Australia is leaving their central bank with some ugly choices.</p><p>But first, US <a href="https://www.mba.org/news-and-research/newsroom/news/2023/01/25/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage applications rose</strong></a> last week from the prior week, a third week of improvement, while mortgage interest rates remained largely unchanged. But year-on-year the variations still remain very negative.</p><p>The Canadian central bank <a href="https://www.bankofcanada.ca/2023/01/fad-press-release-2023-01-25/" target="_blank"><strong>raised the target</strong></a> for its overnight rate by +25 bps to 4.50% as expected, and signaled the end of its current aggressive tightening phase. But it is continuing its sell-down of bonds</p><p>China might be on holiday this week, but their weather is becoming a story there. <a href="https://www.cma.gov.cn/wmhd/2011wzbft/2011wftzb/202301/t20230110_5251143.html" target="_blank"><strong>Temperatures have dived</strong></a> - and that has caught out their energy system to supply enough heating in some key regions and cities. Local governments starved for cash after enormous spending on their “zero Covid” measures cannot afford to keep up adequate supplies of natural gas. And they are in no position to bring in subsidies which have been a strategy in the past to make heating and cooking affordable in winter. As the pandemic spreads illness, the cold is adding to the misery of millions. These are problems China doesn't need right now.</p><p>Singapore <a href="https://www.singstat.gov.sg/-/media/files/news/cpidec2022.ashx" target="_blank"><strong>said</strong></a> its consumer inflation rate rose by 6.5% in December 2022, which was less than the 6.7% it recorde