The government’s plan to cut temporary resident numbers over 2025 to 2027 will result in the weakest three years for population growth in Canada’s 157-year history. While it might not be enough to persuade the Bank of Canada to start its loosening cycle …
25th March 2024
Push-back from the authorities in China and Japan has stabilised their currencies against the US dollar today, and our base case remains that policymakers will prevent destabilising depreciations in the renminbi and yen. Nonetheless, it is worth thinking …
Note: We’ll be covering our views on residential market winners and losers in both the for-sale and rental markets in a Drop-In Tuesday 16th April 1100 EST/1600 BST . Register here for the 20-minute session. As mortgage rates fall, we think the …
Overview – Low oil output in the Gulf will constrain GDP growth over the first half of this year. But as this reverses, growth will pick up and by more than most expect. Elsewhere in Middle East and North Africa, external financial support has mostly …
Faltering consumer spending reinforces our view that GDP growth will slow this year, although that slowdown is likely to be modest. After a disappointing couple of months for inflation, easing demand growth should help to drive a more marked decline later …
New home sales disappoint in February February’s tiny drop in new home sales cut short what appeared to be the beginning of a recovery in recent months. Even though the drop was extremely small, it still potentially casts some doubt over our upbeat new …
We held an online Drop-In session last week to discuss the outlook for monetary policy following the US Fed and Bank of England policy meetings and comments by the ECB’s Christine Lagarde. (See a recording here .) This Update answers several of the …
Overview – After having been too high for the past three years, inflation in the UK will be too low for the next three years, and much lower than in the US and the euro-zone. Not only do we think that CPI inflation will fall from 3.4% in February to below …
The US dollar has bounced back from its brief drop after the FOMC’s policy announcement and Chair Powell’s press conference, and is ending the week stronger across the board. To some extent that is surprising: the FOMC’s overall message arguably had a …
22nd March 2024
While the current backdrop may keep the renminbi on the back foot against the dollar in the short term, we doubt that these headwinds will push the currency meaningfully lower this year. The renminbi has finally weakened against the dollar after more than …
Germany's economy is in “troubled waters” and doing “dramatically badly” – and those are just the assessments of its economy minister. But are the recessionary conditions in the euro-zone’s biggest economy merely a cyclical blip or signs of deeper …
14th March 2024
Has Tusk changed the tide in Poland? The 100 day milestone for Poland’s new government is marked today. From an economic perspective, we think there are three key points worth highlighting about how the outlook has and hasn’t changed. First, the release …
Further attacks by Ukraine on Russia’s oil refining sector were the major driver of crude prices this week with the price of Brent remaining firmly above $85 per barrel. Reports that the US had urged Ukraine to halt the strikes may have tempered the price …
Note: We will be discussing the outlook for residential markets across the US in a 20-minute online briefing on Tuesday April 16th. Find out more here . Overview – This year is being flagged by many as the year the recovery starts, but there is still a …
LGFVs stepping up land purchases Despite the collapse in home sales, construction activity has retreated only modestly in recent years. We think the bulk of the correction has yet to come , with construction activity likely to halve by the end of this …
Argentina: another strong budget outturn Coming hot off the heels of last week’s successful debt swap, there was further good fiscal news in Argentina this week. Budget data showed another large primary surplus in February (albeit smaller than January’s …
Production records a bright start to 2024 The robust increase in global steel production since the beginning of the year probably has a bit further to run since there are few signs that the two largest producers – China and India – will slow their supply …
SARB: will rate cuts ever come? The South African Reserve Bank (SARB) looks set to leave interest rates on hold at 8.25% next week and it now seems an easing cycle won’t begin until after May’s election, the outcome of which could even persuade the SARB …
The Fed wasn’t as hawkish as we had expected this week and, assuming the recent upturn in core inflation proves temporary, there is still a good chance that interest rate cuts will begin in June. Fed content with more gradual inflation fall Despite recent …
The surprise fall in February leaves CPI inflation on track to average 2.8% this quarter, well below the Bank of Canada’s forecast of 3.2%. As the decline in inflation pressures was broad-based, there is a growing likelihood that the Bank of Canada will …
The Bank of England was never going to do anything except keep interest rates at 5.25% this week, but we and the financial markets were surprised that it took further steps in preparing the ground for the first interest rate cut. (See here .) As a result, …
Heading for another decent quarter Despite only modest rises in retail sales volumes in January and February, the earlier strength in December means that growth should remain strong this quarter. The 0.3% m/m fall in retail sales was a little smaller than …
Data released this week broadly support our view that the euro-zone economy will have stagnated in Q1. The Composite PMI rose a touch in March but remained consistent with GDP flatlining. And the ZEW painted a similar picture. Admittedly, we also learned …
GDP growth will come in below consensus in most EMs this year, with the notable exceptions of India and Taiwan. Although stubborn wage growth means the pace of disinflation is likely to slow from here, we think the EM monetary easing cycle will broaden …
Political uncertainty in Vietnam on the rise One of Vietnam’s key appeals to foreign investors is its political stability relative to other low-income countries in the region. (See Chart 1.) Along with low labour costs and an improving business …
Little change in language, possible easing from mid-2024 Russia’s central bank (CBR) left its key policy rate on hold, at 16.00%, for a second consecutive meeting as expected today and there were few notable changes in its press statement. The central …
Election season is here After a seemingly interminable wait, the Election Commission this week finally confirmed the dates for the general election. Almost a billion people are eligible to vote, making it the largest expression of democratic principles …
Germany Ifo Survey (March 2024) Although the Ifo Business Climate Index rose quite sharply in March, much of the improvement was in the volatile expectations component and it remained at an exceptionally low level. We still think the economy is likely to …
This page has been updated with additional analysis since first publication. Shoppers largely shrug off wet weather as retail rebound only paused Unchanged retail sales volumes in February (CE forecast 0.0% m/m, consensus -0.4% m/m), as shoppers largely …
Rate cut in August remains plausible At its meeting earlier this week, the RBA dialled down its hawkish bias, with Governor Bullock noting that “the risks to the outlook are finely balanced”. However, her statement may well have been a little premature. …
Run-off in bond holdings will accelerate The Bank of Japan didn’t disappoint at this week’s meeting as the Bank ended negative interest rates, Yield Curve Control and its ETF purchases. Even so, 10-year JGB yields declined and the yen weakened to as low …
Japan’s exit from negative interest rates could place some upward pressure on bond term premia elsewhere, but we don’t think it will prove too disruptive to markets even if the BoJ ultimately hikes a lot more than we expect. Investors largely took the …
Inflation will return to BoJ’s target by year-end The renewed jump in headline inflation in February leaves the door open for another rate hike by the Bank of Japan, but with underlying inflation moderating the case for tighter policy is weakening. The …
21st March 2024
Easing cycle begins but rate cuts to be slow going Mexico’s central bank finally embarked on an easing cycle today, lowering its policy rate by 25bp to 11.00%, but the fact that the vote was split and that Banxico didn’t commit to further rate cuts …
This week’s flurry of central bank meeting points to growing confidence among policymakers in most major economies that inflation is on track back to target. That supports our view that long-term government bond yields will fall back a bit further this …
The flash PMIs for March suggest that the euro-zone economy is still flatlining, while the UK and Japan seem to be pulling out of recession heading into Q2. The survey indicators of price pressures moved in different directions, but in general remain a …
Overview – Although we expect GDP growth to slow to a below-potential pace over the next few quarters, we then anticipate a pick-up late this year, as monetary policy flips from a headwind to a tailwind. Our forecasts are based on the assumption of no …
Note: We will be discussing the outlook for European commercial real estate markets in a 20-minute online briefing at 10am BST on Wednesday 10th of April. (Register here .) Overview – Further near-term yield rises will push property values lower in the …
Existing home sales accelerate despite higher mortgage rates Existing home sales rose in February which we think largely reflects the sharp fall in mortgage rates at the end of last year. But borrowing costs have been rising so far in 2024, which in the …
With the Bank of England striking a slightly more dovish tone whilst keeping interest rates at 5.25% and inflation likely to fall further and faster than the Bank expects, we still think a rate cut in June is possible and that rates will fall to 3.00% in …
Egypt: appreciation for the CBE’s policy shift After the “Super Wednesday” devaluation on 6 th March, the pound has appreciated over the past week or so and it appears as though officials have (so far) stuck to their pledge to let the currency move more …
Slight dovish tilt, and fast fall in inflation will make BoE more dovish before too long The Bank of England sprung no surprises, leaving interest rates at 5.25% for the fifth time in a row and, despite no MPC members no longer voting to raise interest …
Despite the booming economy, inflationary pressures in Taiwan are likely to remain subdued. Accordingly, we think today’s unexpected rate hike by the central bank (CBC) will prove to be a case of one and done. Today’s decision to raise the policy rate by …
The tailwinds that have underpinned the rebound in the dollar this year seem, to us, to have run their course. While we wouldn’t be surprised if the dollar stayed firm over the coming months, we still think the greenback will edge lower – particularly …
In the wake of this week’s FOMC and BoJ policy announcements we are revising our forecast for the Japanese yen. While we still expect the Japanese yen to rebound over the course of 2024, we now project it to reach 140 by the end of the year and 135 by …
Governor Karahan retakes the initiative Turkey’s central bank unexpectedly raised its key policy rate by 500bp at today’s meeting, to 50.00%, and its hawkish communications leave open the possibility of another rate hike in April. With the potential for a …
The SNB under Chairman Thomas Jordan has never shied away from making big calls, so it was fitting that it surprised markets with a 25bp rate cut today, to 1.5%, only three weeks after Mr Jordan announced he would leave his post in September. We expect …
