The Riksbank will keep the policy rate at 1.75% next week and will probably leave its forward guidance unchanged, saying that it will maintain the current policy rate for some time to come. Norges Bank will also leave its policy rate unchanged, at 4%, but …
11th December 2025
The SNB shrugged off lower-than-expected inflation and kept faith that its zero interest policy rate will be sufficient to boost inflation in the medium term. We think it will be less relaxed next year, when we expect inflation to average just zero, and …
CBRT delivers a bigger cut, but communications hawkish The decision by the Turkish central bank (CBRT) to accelerate the pace of its easing cycle today with a 150bp cut to its one-week repo rate, to 38.00%, was accompanied by relatively hawkish …
Investors’ interest rate expectations have risen… … but ECB will leave rates unchanged next week and reiterate neutral stance. And we think the ECB’s next move is more likely to be a cut. Stronger-than-expected economic data and recent comments by …
Egypt’s external strains to ease further The IMF is in Cairo and, unsurprisingly, Egyptian officials are stepping up their efforts to jumpstart the privatisation programme in order to keep the Fund happy. That said, further signs of improvement in Egypt’s …
SNB unfazed by zero inflation for now, but will cut next year The SNB shrugged off lower-than-expected inflation in the fourth quarter and kept its policy rate at zero. However, we think it will be less relaxed next year, when we expect inflation to …
More easing on the cards as corruption scandal weighs on the economy The Bangko Sentral ng Pilipinas (BSP) lowered its reverse repo rate by a further 25bps today (to 4.50%) and, with the ongoing corruption scandal likely to continue to weigh on economic …
No signs of a post-Budget bounce in buyer sentiment Despite three quarters of the survey responses being gathered after the Budget, November’s RICS survey suggests buyer sentiment fell further in November even though actual housing activity and prices …
Our base case remains that Treasury yields will rise and the US dollar will rally in 2026, as the Fed delivers just one more cut. But Wednesday’s meeting highlighted some of the risks to that view. At face value, the Fed’s cut could have been construed as …
Despite the pullback in employment, labour market conditions remain firm Although the weak November jobs report muddies the waters for the RBA, there are few indications that the labour market is falling off a cliff. Given its concerns about inflation …
Hawkish BCB leaves January rate cut in doubt Brazil’s central bank continued to strike a hawkish tone as it left interest rates on hold again at 15.00% today. There was little in the statement to suggest that policymakers are preparing for a rate cut in …
10th December 2025
The FOMC overcame its divisions to vote for another interest rate cut today, albeit with three dissenting votes. The hawks influenced the accompanying policy statement, which notes that the FOMC will now consider both “the extent and timing” of additional …
Fed softens blow of hawkish cut with decision to resume asset purchases The FOMC overcame its divisions to vote for another interest rate cut today, albeit with three dissenting votes. The hawks on the Committee had a clear influence on the accompanying …
Overview – Economic growth will remain subdued over the next two years as the largest economies struggle and the smaller ones outperform. Past ECB interest rate cuts will do little to boost activity because private sector borrowing costs have not …
The Bank of Canada kept its key policy rate at the bottom of its 2.25% to 3.25% neutral range estimate today, as expected. While there was recognition from policymakers that the labour market had performed better recently, this was not enough to change …
Following a likely 60,000 slump in October, as more than 100,000 workers dropped off the federal payroll, we estimate that non-farm payrolls rebounded by 50,000 in November. We expect the unemployment rate was 4.4% in November, unchanged from September. …
Bank acknowledges improved outlook but tempers hike expectations The Bank of Canada kept its key policy rate at the bottom of its 2.25% to 3.25% neutral range estimate today, as expected, while acknowledging that the economic outlook has improved somewhat …
Concerns about a stock market bubble are unlikely to dictate central banks’ interest rate decisions in the near term. It’s difficult to call a bubble and even harder to manipulate stock markets without unwanted side effects. Like the dotcom bubble, the …
Falling inflation leaves a January rate cut finely balanced The drop in Brazilian inflation to 4.5% y/y in November won’t prompt an interest rate cut at the central bank’s meeting later today (we expect the Selic rate to stay at 15.00%). But it does …
10-year Treasury yields have risen in recent weeks despite investors moving to price in a rate cut today. One reason for that seems to have been an increase in the term premium, and we expect this component to remain volatile over the coming year. It …
The Saudi economy has been boosted by the unwinding of oil output cuts this year and this will continue over the coming quarters, but a step up in fiscal consolidation efforts means that overall GDP growth is likely to come in weaker than most anticipate …
Surprise softer reading adds to CBE headaches Egypt’s headline inflation rate eased a touch from 12.5% y/y in October to 12.3% y/y in November despite further rent rises and fuel subsidy cuts. Even so, given the Central Bank of Egypt’s own admission to …
On our current forecasts, India is on course to overtake Japan as the world’s fourth-largest economy in 2027. But there is a decent chance that the upcoming rebasing of India’s national accounts data (due in February) will show that this has happened …
Food prices push up inflation, but domestic demand remains weak Consumer price inflation rose to its highest level since China’s reopening from zero-COVID (excluding volatility around Lunar New Year), but this was the result of a weather-related rise …
Overview – The RBA is poised to join the rather exclusive club of advanced economy central banks that tightens policy in 2026. With growth accelerating when there’s little to no spare capacity and the labour market tighter than is consistent with full …
The JOLTS data for September and October show glimpses of a rosier labour market, with firms in tariff-affected sectors posting more jobs and layoffs concentrated in a couple of sectors. This chimes with November’s NFIB survey, also released today, which …
9th December 2025
Long-dated government bonds in many developed markets (DMs) have sold off aggressively over the past month or so as investors have pared back rate cut expectations or, increasingly, pencilled in rate hikes. While we think these moves are overdone in many …
The Q4 PREA consensus downgraded the all-property forecast for 2026-29. Even so, the consensus is still notably more optimistic than us. Indeed, stretched valuations mean we expect a modest rise in NOI yields and more muted capital growth over this …
We have augmented our UK Commercial Property coverage with the addition of office forecasts for seven major regional cities. Overall performance is informed by our views on the RoUK market, but differences in the outlook for regional labour markets, …
The rise in the number of business bankruptcies this year, despite little change in default rates for bank loans or speculative-grade debt, seems to reflect the larger number of firms trying to re-finance debt issued when interest rates were much lower. …
CBK delivers another 25bp cut The Central Bank of Kenya lowered its policy rate by another 25bp, to 9.00%, today and the accompanying statement suggested that the economy needs more stimulus, reinforcing our view that more cuts are coming. Today’s …
The November NFIB survey suggests that the labour market is regaining momentum, while also pointing to some upside risks to inflation. At the margin at least, that lends some support to our view that the Fed’s likely interest rate cut tomorrow will be …
The economic fallout from renewed border clashes between Thailand and Cambodia should remain modest. Trade between the two countries is small, and Thailand’s tourism sector should be insulated given that the fighting is far from the country’s main …
December cut still on the cards but easing to become more gradual next year The rise in Mexican inflation to 3.8% y/y in November is unlikely to stop Banxico from cutting its policy rate by another 25bp next week. But it supports our view that the easing …
The Middle East and North Africa is set to record its fastest pace of GDP growth (outside of the pandemic period) since 2011. Continued oil output hikes and the switch on of Qatar’s North Field will boost the Gulf economies. But lower energy prices are …
Overview – After a very strong 2025, economic growth in India is likely to slow in 2026 and 2027 in the face of punitive US tariffs. But they could get rolled back and, even if they don’t, India will remain a relative bright spot in the global economy. …
The RBA sounded concerned about upside risks to inflation when it left its policy rate unchanged today and we now believe that its next move will be rate hike as soon as February . The Bank’s decision to leave the cash rate unchanged at 3.6% was unanimous …
China’s leadership has spurned Nvidia’s knee-capped H20 chips. But it may be willing to let its firms buy the more powerful H200 chips that President Trump is now offering. This would allow China to speed up its buildout of AI infrastructure and increase …
RBA will tighten policy as soon as February The RBA sounded concerned about upside risks to inflation when it left its policy rate unchanged today and we now believe that its next move will be rate hike. The Bank’s decision to leave the cash rate …
Poland’s monetary easing cycle has dragged down short-term government bond yields, but unlike in past cycles, long-term yields haven’t come down very far. Even with the policy rate now likely to fall to 3.50% next year, given the backdrop of underlying …
8th December 2025
The readout from today’s Politburo meeting strikes a relatively dovish tone, suggesting that more fiscal support and monetary easing is on the cards next year. The leadership continues to highlight the importance of domestic demand in driving the economy, …
Last week I outlined the key macro themes that are likely to shape the global economy in 2026 . This week I tackle a question that has come up frequently in subsequent client meetings: What are the key risks to our view? Ask an economist about “risks” and …
Level of output weak despite October rebound The rise in German industrial production in October was stronger than expected but it still left output close to a post-pandemic low. And though defence spending appears to be supporting production, this is …
