The dovish tone at today’s ECB monetary policy meeting supports our view that the ECB will cut by 25bp at the December meeting. However, the risks to our policy rate forecasts are increasingly skewed to the downside. What’s more, we doubt that the easing …
17th October 2024
With the means, motive and opportunity for Saudi Arabia to undergo a reversal in oil policy falling into place, this Update thinks through the possible ramifications of such a move. In short, considerable spare capacity in OPEC and more resilient …
Recessions fears continue to go unfounded, with the labour market still in good health after the strong September employment report. Prospects for October look weaker due to recent temporary disruptions but, with core inflation pressures heating up a …
Before the global financial crisis, 50bp interest rate cuts by the ECB were more common than 25bp reductions. Circumstances today are different, but if ECB policymakers are convinced that they need to keep cutting, we think they would not shy away from a …
BRICS+ to meet with a notable absentee Next week’s BRICS+ summit in Russia is likely to focus on the group’s further expansion after Egypt and the UAE (along with several other countries) joined last year. Notably, however, Saudi Arabia – which was also …
Several EMs have reached provisional agreements with creditors to restructure their sovereign debts in recent months, including Zambia, Ukraine, Sri Lanka and Ghana. In principle, restructurings should pave the way for improved fiscal positions, stronger …
Christine Lagarde’s message in today’s ECB press conference was distinctly dovish and supports our view that the ECB will cut interest rates by 25bp at each of the next few meetings, at the very least. It wouldn’t be surprising if the Bank opted for a …
Dutch prime logistics rent growth is set to be among the highest in the region over the next few years. That reflects both strong prospects for leasing, thanks to a bright economic outlook and greater e-commerce penetration, and relatively tight supply. …
Production hit by hurricane and Boeing disruptions The fall in manufacturing output in September was entirely due to the disruption caused by the Boeing machinists’ strike and Hurricane Helene. Indeed, with these impacts excluded, industrial production …
Sales strong despite late-month hurricane disruption The strong 0.7% m/m rise in control group retail sales in September suggests that consumption growth strengthened to more than 3% annualised last quarter. That said, timelier data show a big drop in …
25bp rate cuts likely to keep coming Alongside its decision to cut interest rates by 25bp, the ECB stuck to its guidance about data dependence and making decisions on a meeting-by-meeting basis. But the press release also acknowledged the recent weakness …
Slow pace of disinflation will prevent monetary easing this year The decision by the Turkish central bank (CBRT) to leave its policy rate on hold again today, at 50.00%, was accompanied by communications which support our view that monetary easing is …
The detailed breakdown of September’s inflation data, published this morning, showed that underlying price pressures softened slightly. We think that core inflation – and services inflation in particular – will keep falling over the rest of this year and …
This page has been updated with additional analysis since first publication. RBA to focus on inflation fight as labour market remains robust With the labour market running red hot, the Reserve Bank of Australia won’t cut rates before the first half of …
Falling inflation across developed markets (DM) supports our view that policy rates will generally settle at their neutral levels, close to current market pricing in most DMs. That’s why we expect long-dated bond yields to stay near their current levels. …
16th October 2024
GDP growth and inflation have surprised to the downside of Bank’s forecasts That should persuade the Bank to enact a larger 50bp cut next week We expect another 50bp cut in December to take the policy rate to 3.25% by year-end The Bank of Canada has said …
We may learn more about the size and structure of China’s fiscal package over the next couple of weeks, but based on what we know the impact on advanced economies will probably be small. The bigger global story is that even if the package is much bigger …
Supply continues to outpace demand Lower mortgage rates have provided a small boost to demand but, with new listings outpacing sales again in September, the sales-to-new listing ratio suggests that house prices will soon fall. Meanwhile, developers seem …
South Africa’s economy continued to pick-up in the middle of Q3 but the recovery is taking place at different speeds across sectors; lower inflation is supporting consumer-facing sectors but industry is lagging behind. As the drag from supply-side …
Manufacturers still struggling The 0.8% m/m decline in manufacturing sales volumes in August looks consistent with the flash estimate that GDP was unchanged that month, leaving the economy on track for a weaker third quarter. Although the S&P Global …
Balancing investing in the economy and fiscal credibility In her first Budget on Wednesday 30 th October the Chancellor, Rachel Reeves, faces the unenviable task of trying to achieve three objectives. First, being able to say there will be “no return to …
We are nudging down our forecast for economic growth in France next year from 1.0% to 0.7% because of the government’s plan to tighten fiscal policy. That said, we think the deficit will come down much less than the government plans, from 6.1% of GDP this …
Surveys of banks, developers and surveyors all point to a recovery in capital values over the next few months. As does the behaviour of investors. The strength of that recovery is more uncertain, with the indicators pointing to annual price growth …
We will be holding an online briefing later today to discuss the outlook for economic policy across Asia. You can register here . Hold does not mark the end of the easing cycle Bank Indonesia today left interest rates on hold (at 6.00%), but we think …
Another 25bps cut, with more to come The central bank in the Philippines cut rates by 25bps and signalled that the recent economic data support its shift towards a looser monetary policy stance. Further gradual loosening lies in store in the coming …
We will be holding an online briefing later today to discuss the outlook for economic policy across Asia. You can register here . BoT cuts as deflation risks mount Thailand’s central bank (BoT) today cut interest rates by 25bps (to 2.25%), but appeared to …
This page has been updated with additional analysis since first publication. Not quite as good as it looks The surprisingly large drop in CPI inflation in September increases the chances that the Bank of England will speed up the pace of interest rate …
This page has been updated with additional analysis since first publication. Soft inflation data tee up another 50bp cut by the RBNZ The weaker-than-expected Q3 CPI data reinforce our conviction that the RBNZ will loosen policy more aggressively than most …
15th October 2024
Israel’s economy is under strain from the conflicts in Gaza and Lebanon, with supply constraints both holding back growth and causing inflation concerns to build. The softer-than-expected inflation figures for September released today will provide some …
Notwithstanding some weakness today, enthusiasm for tech stocks has returned in recent weeks. We think this enthusiasm will drive the US stock market higher, despite the optimism that is already discounted in equities and the many looming risks. Much of …
We’ve long held the view that the Bank of Canada will need to cut rates at an aggressive pace – and market pricing is quickly aligning with our forecast for a 50-basis point move next Wednesday. But how far will the Bank go to ease policy, and how quickly …
Italy’s 2025 budget, set to be approved by cabinet today, suggests Italy will bring its deficit below the 3% of GDP limit imposed by EU fiscal rules much sooner than France. But Italy’s debt-to-GDP ratio is still likely to remain much higher than …
Industrial’s shift toward logistics means consumer-focused economic variables have become important drivers of rental growth. Admittedly, employment growth is set to slow. But a combination of relatively solid consumer spending growth, rising online sales …
We held an online Drop-In session last week to discuss progress on Saudi Arabia’s Vision 2030 reform programme and the implications for the Kingdom’s economic outlook. (An on-demand recording is available here and an in-depth Focus here .) This Update …
The BRICS+ summit in Russia next week is likely to see another push on expansion, mainly to close allies of China and Russia. But limited economic benefits for potential new members, divisions among existing members, and concerns (for some) about …
Downside surprise makes a 50bp cut next week look likely The downside surprise to headline inflation in September and muted monthly gains in the CPI-trim and CPI-median core measures support our view that the Bank of Canada will choose a more aggressive …
Latin America has played an important role in absorbing China’s export surge, which is generating concern among local policymakers. But the response is likely to vary across the region. Governments in Mexico and some smaller Central American countries …
Inflation picks up, one more rate hike lies in store Nigeria’s headline inflation picked up to 32.7% y/y in September, confirming that the CBN’s fears about upside risks from last month’s petrol price hikes were not misplaced. We think the CBN will …
South African Finance Minister Enoch Godongwana will be in a cheerful mood when he delivers the Medium-Term Budget Policy Statement (MTBPS) on 30th October; the budget deficit has narrowed and the government’s borrowing costs have fallen sharply. Even so, …
Having stormed to victory in February’s presidential election, Prabowo Subianto, a former army general and the current defence minister, will take over from Joko Widodo on Sunday (20 th October). Since his election victory, Prabowo has made a number of …
This page has been updated with additional analysis since first publication. Rise in industrial production not the start of a recovery While the 1.8% m/m rise in industrial production in August was the strongest monthly rise in over a year, it is probably …
The ECB’s latest Bank Lending Survey suggests that demand for credit is recovering, but the rebound in housing loans is much stronger than in consumer or enterprise loans. The Bank Lending Survey for Q3 provides grounds for optimism that the housing …
South Africa’s Finance Minister Enoch Godongwana will be in the unusual position of presenting the Medium-Term Budget Policy Statement (MTBPS) later this month against the backdrop of a sharp improvement in the public finances. And he is likely to use the …
Inflation edges higher This response has been updated with additional analysis. Saudi Arabia’s headline inflation rate rose a touch from 1.6% y/y in August to 1.7% y/y in September, a third consecutive increase and the fastest pace of inflation since …
Contrary to many expectations in the aftermath of the BJP’s humbling in the general election, there is little evidence so far of Prime Minister Modi’s party shifting to more populist policymaking. And the risk of fiscal slippage has eased following …
This page has been updated with additional analysis since first publication. Further easing in wage growth supports case for more interest rate cuts The further fall in wage growth in August, together with signs that the labour market continued to loosen …
The pledge at this weekend’s press conference to increase fiscal expenditure could support China’s commodity demand over the first half of 2025. But at this stage, none of the fiscal or monetary policy announcements over the past month suggest that …
14th October 2024
Evidence of residual seasonality in the core PCE deflator means there is a risk that core price pressures will rebound in the new year. That said, the residual seasonality is concentrated in core goods, which have been falling in price this year, …
In light of both Hurricanes Helene and Milton we are flagging notes where we highlighted the physical climate risks facing the US. Ranking metros by physical climate risks to real estate Elevated insurance premiums continue to hit valuations Unpriced …
