Growth boost for Korea More policy support in Korea looks to be on its way soon. According to the minutes of the Bank of Korea’s May meeting (when rates were cut a further 25bps) which were released earlier this week, Board members were united on the need …
20th June 2025
Front-running fades but exports to US still strong We learnt this week that the goods trade deficit narrowed in May to c.$22bn, from c.$26bn in April. The breakdown shows that the front-running of exports to the US - evident prior to President Trump’s …
The early evidence suggests that EM exports have held up well, despite higher US tariffs. That’s partly because exporters have front-loaded shipments to the US or (in China's case) have avoided high tariffs by shipping via third countries. So long as this …
We’re hosting in-person Roundtables in London on Tuesday 1st July, where clients can discuss with our economists and their peers how the government has influenced the economy in its first year in office. (Register here .) This page has been updated with …
At our in-person Roundtables in London on Tuesday 1 st July, clients can discuss with our economists and their peers how the government has influenced the economy in its first year in office. (Register here .) This page has been updated with additional …
Downside risks persist in Australia Australian employment unexpectedly fell by 2,500 last month, as a 38,700 rise in full-time employment was more than offset by a 41,200 fall in part-time employment. However, with the unemployment rate holding steady at …
Case for tighter monetary policy remains strong The Bank of Japan tweaked its bond purchases at this week’s meeting but retained the dovish tone adopted at its May meeting. Indeed, the minutes of the May meeting showed that Board members were worried …
Taiwan’s stock market has been a key beneficiary of the AI boom and was one of the top performers in the world in 2024. This year though, equities in fellow Asian tech heavyweight Korea have taken some of the spotlight. We expect Taiwan to be back on top …
Inflation overshoot will prompt October rate hike Inflation is set to overshoot the Bank of Japan’s forecasts by a wide margin and we expect the Bank to resume its tightening cycle before the end of the year. Headline inflation dropped from 3.6% to 3.5% …
Overview – The Israel-Iran conflict creates significant uncertainty over the outlook. Our working assumption is that it eases relatively soon, in which case economic growth across the region should pick up. But the turn to fiscal tightening in the Gulf …
19th June 2025
A combination of factors, including surging energy and wage costs and an increased regulatory burden, have pushed multifamily operational costs to over 40% of rent, cutting income returns. But with energy costs set to drop and a looser labour market …
We’re discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm BST today. (Register here .) And a t our in-person Roundtables in London on Tuesday 1 st July, clients can discuss with our economists and their …
Dovish hold supports our view of August cut and rates falling to 3.50% or below next year The Bank of England sounded a bit more dovish while leaving interest rates at 4.25% today, despite the extra upside risks to inflation from events in the Middle …
CBRT still sounding hawkish, but cuts on the cards The statement accompanying the Turkish central bank’s decision to leave its key interest rates unchanged was hawkish, suggesting that policymakers want to push back against expectations for aggressive …
Overview – European commercial property is relatively insulated from the direct impact of US tariffs, but property markets are also not likely to see substantial benefit from more fiscal spending. In all, our forecasts are little changed from our last …
Taiwan’s central bank (CBC) left its main policy rate on hold today (at 2.0%) and we expect interest rates to remain unchanged for the foreseeable future. In contrast, most other analysts are expecting rate cuts to begin in Q4. The decision to keep rates …
Israel and Iran have traded strikes over the past week and while there are a large number of ways the conflict could go from here, the risk of further escalation is mounting. Not only would this cause enormous damage to Iran’s economy, but spillovers to …
Surprise cut by Norges Bank but no rush to cut again Norges Bank’s surprise decision to cut its policy rate to 4.25% today – the first in this cycle – is not a sign that policymakers are suddenly in a rush for much looser monetary policy. We expect a very …
There are signs that Japanese carmakers are reducing their prices in the US to retain market share, which seems to vindicate the Bank of Japan’s concerns that US tariffs will weigh on corporate profits. Even so, we still expect firms to grant another …
SNB will cut rates again later this year The SNB decision to cut by just 25bp today means that it has avoided negative rates for the time being. But we think that continued deflation over the coming months will prompt policymakers to cut again at their …
With inflation set to stay low, BSP to cut rates further The central bank in the Philippines (BSP) today cut its main policy rate by a further 25bps (to 5.25%), and the dovish tone from the central bank’s statement and press conference suggests further …
We continue to think Treasury yields will rise, as the Fed stays on hold longer than investors expect. There was minimal market reaction on Wednesday (local time) to a cautious Fed : policy was left on hold, the statement was almost unchanged, and the …
RBA’s easing cycle has further to run Labour market and population data published today are sending mixed signals about capacity pressures in the Australian economy. Either way, they probably won’t prevent the RBA from cutting rates further in the months …
Despite strong bounce in Q1, economy not out of the woods yet Although New Zealand’s recovery gained traction last quarter, there are signs that the upshift in momentum will prove short-lived. Accordingly, we still think there’s a strong case for the RBNZ …
Copom provides a hawkish hint that tightening cycle is over Brazil’s central bank opted, as we had expected, for a 25bp hike in the Selic today to 15.00% and, while the tightening cycle is probably now over, Copom went out of its way to push back against …
18th June 2025
The Fed will remain on the sidelines for some time, waiting to see what impact tariffs will have on price inflation. We suspect that lingering fears of a more persistent impact will persuade the Fed to hold off cutting interest rates until the first half …
Fed splitting into two camps The Fed’s new interest rate projections still just about show a median of 50bp of cuts to its policy rate for this year, but it was very close. Back in March, 11 of 19 officials anticipated two 25bp cuts this year, with four …
Fears that the US may get involved in the ongoing Israel-Iran conflict have led to another pick-up in oil prices and renewed jitters across financial markets. The impact so far remains limited, but as the conflict continues the risk of a more material …
Oil prices could feasibly surge to $130-150pb were hostilities between Israel and Iran to escalate in a way that resulted in major disruption to Middle Eastern energy exports and/or shipping through the Strait of Hormuz. However, so long as the conflict …
Overview – Emerging Europe is generally less vulnerable than other EM regions to higher US import tariffs, but we have still nudged down some of our GDP growth forecasts for this year. We think the region will follow diverging paths – with Czechia and …
Iran-Israel conflict …
This Update outlines potential outcomes of the Iran-Israel conflict and teases out the implications for the region, the global economy and commodity and financial markets. One point that emerges is that an escalation of the conflict still leaves multiple …
Clouds gathering over homebuilding The sharp drop in housing starts in May is not as bad as it looks, as it was entirely due to a steep decline in groundbreaking in the volatile multi-family sector, while unseasonably wet weather in the East seemed to …
April’s activity data suggest that the weakness of South Africa’s economy in the first quarter of the year – in which GDP expanded by a measly 0.1% q/q – carried over into the start of Q2. Industry continued to struggle and the retail sector lost some …
UK commercial property is on the road to recovery and lending to the sector has been strong in recent months. But with yields set to remain stable, the rise in capital values will be modest over the next few years. Thanks to stronger rental growth the …
May’s steep decline in euro-zone services inflation was largely due to the timing of Easter. But looking through that effect, services inflation is on a downward trend that we expect to continue. Data published this morning confirmed that services …
Two developments in borrower and lending behaviour mean that housing activity and prices can be higher than before the pandemic for any given mortgage rate. That’s why we expect housing transactions to recover to their pre-pandemic levels and house prices …
Low inflation suggests SARB’s easing cycle has more room to run The fact that South Africa’s headline inflation was unchanged at 2.8% y/y in May, lends more evidence that the SARB should be unworried about underlying price pressures in the economy. Coming …
Riksbank cuts, but will probably not cut again While the Riksbank cut its policy rate by 25bp this morning and suggested there was a reasonable chance of a further cut this year, the outlook is uncertain and underlying economic conditions aren’t quite as …
BI to resume easing cycle soon Bank Indonesia today left interest rates unchanged at 5.50%, but as dovish comments in the press conference by Governor Perry Warjiyo make clear, this is unlikely to mark the end of the central bank’s easing cycle. We are …
This page has been updated with additional analysis since first publication. We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20 minute online Drop-In at 3pm BST on Thursday 19 th June. (Register here .) We're hosting in-person …
Japan's exports may well fall in earnest soon While US-bound exports kept falling in May, Japan’s overall exports were little changed and we estimate that net exports will be only be a small drag on Q2 GDP growth. The 1.7% annual fall in export values in …
Although we’ve become less confident the Bank of Japan (BoJ) will raise its policy rate again this year given its view of the risks to growth and inflation, for now we are sticking to our forecast that the 10-year JGB yield will rise to 1.75% by the end …
17th June 2025
Modest improvement in manufacturing output The modest decline in industrial production in May was driven by the volatile utilities sector; manufacturing and mining both increased, although admittedly only by a little. It is difficult to see a clear impact …
Temporary drags mask underlying health The weakness in retail sales in May was mostly due to temporary drags from the end of tariff front-running and the unseasonably wet weather in the east of the country, so should reverse in June. Control group retail …
Denmark’s exceptional growth in recent years has been driven by one sector (pharmaceuticals) and one firm within that sector (Novo Nordisk). Its output has declined this year, raising questions about how much it will support growth in future. But even if …
Mexico has weathered the US’s shift toward protectionism better than many feared just a few months ago, but the economy is still likely to struggle this year. While the rest of the region is relatively insulated from the trade war, lower commodity prices …
The Bank of Japan decided to taper its bond purchases at a slower pace from next year and retained its pessimistic outlook for the economy. However, we expect that mounting upside risks to the Bank’s inflation forecasts will prompt the Bank to hike rates …
