We think the Norges Bank will follow through on its plan to raise its policy rate by 25bp next week, to 3.50%, although there is an outside chance of a 50bp hike. Either way, we think it will push its interest rate forecast up, showing a peak in the …
15th June 2023
Taiwan’s central bank (CBC) today kept its main policy rate unchanged (at 1.875%), but with the economy struggling and inflation set to fall further, we expect it to start cutting rates in September. The decision today was correctly predicted by 19 of …
Will the Bank of Japan respond to this inflationary surge? Why is India’s near-term looking less positive? Which Asian central bank will be next to cut rates? Following publication of our Q3 Economic Outlooks, our Asia economists held a 20-minute online …
EMs experienced a strong first quarter as GDP growth picked up almost across the board, but growth is likely to have slowed in most major economies in Q2 and we think it will remain soft in Q3. We don’t expect a substantive recovery in EMs until much …
Stage set for rate cuts later in the year Taiwan’s central bank (CBC) today kept its main policy rate unchanged (at 1.875%), but with the economy struggling and price pressures set to ease further, we expect the central bank to start cutting interest …
We will update the linked webpage with additional analysis during the next hour. Inflation edges up, but should resume slowdown over the rest of the year Saudi Arabia’s inflation rate rose a touch to 2.8% y/y in May, as an acceleration in non-food …
As expected, the Fed held its policy rate unchanged at between 5.00% and 5.25% today, but it made clear in the accompanying statement that pause was only to allow officials to “assess additional information and its implications for monetary policy”. In a …
This page has been updated with additional analysis and charts since first publication. We discussed the state of China’s post-zero-COVID recovery, what we're expecting in response from policymakers, and the implications for markets, in an online briefing …
Tight labour market will prompt more monetary tightening With the labour market still firing on all cylinders, we’re happy with our forecast that the Reserve Bank of Australia will lift the cash rate all the way to 4.85% by September. The 75,900 rise in …
Stagnant exports a prelude of downturn to come The trade deficit narrowed for an eighth consecutive month in May as both import prices and volumes continued to fall. “Core” machinery orders rebounded in April, but that still points to a fall in capital …
Struggling exports a prelude of downturn to come Export values inched up by just 0.6 y/y in May. That translated into a 3.1% m/m fall in seasonally adjusted terms. With export prices having risen by 2.0% m/m in May, volumes probably saw a sharp fall, …
Recession will drive RBNZ to cut rates by Q4 The contraction in Q1 GDP means that a recession is now well under way in New Zealand. Accordingly, we’re sticking with our forecast that the RBNZ will shift gears and start cutting rates before year-end. The …
Recession will drive RBNZ to cut rates by Q4 With New Zealand now in recession, we’re more confident that the RBNZ will start cutting rates by Q4 of this year itself. The -0.1% q/q contraction in production GDP was in line with what most, including …
Fed pauses as expected but, in hawkish move, eyes 50bp in additional rate hikes As expected, the Fed held its policy rate unchanged at between 5.00% and 5.25% today, but it made clear in the accompanying statement that pause was only to allow officials to …
14th June 2023
While headline CPI prints have been encouraging in recent months, policymakers will be nervous about the stickiness of core inflation. Average headline inflation in major advanced economies had dropped from 8.5% late last year to below 6% in April, and …
Florida and other parts of the Sunbelt (notably major cities in Texas) will likely face the most severe physical climate risk over the next 30 years. While this is unlikely to come as a major surprise, we don’t believe that this risk is being consistently …
The Fed is likely to “skip” a hike (Wednesday) ECB policymakers will probably raise their policy rates by 25bp (Thursday) We expect the PBOC to lower its 1-year MLF rate from 2.75% to 2.65% (Thursday) Key Market Themes Investors may be right about the …
Policy shift continues, but reasons to remain cautious Reports that the Central Bank of Nigeria has devalued the naira would, if confirmed, represent another positive policy step by the new Tinubu administration. But we retain our reservations this is a …
After dodging recession, economy made decent start to Q2 April’s activity data out of South Africa suggest that, after dodging a technical recession in Q1, the economy made a bright start to the second quarter. But external and domestic headwinds, …
Output will weaken despite increase in April The uptick in industrial production in April was mostly driven by strong growth in Ireland, with many other major euro-zone economies recording a fall in output. We expect industry to struggle this year as …
Resurgence in activity unlikely to last Note: We’ll be discussing the UK’s economic, housing market and policy outlook in light of the BoE’s June rate decision in an online briefing on 22nd June at 10:00 EDT/15:00 BST . Register now . The 0.2% m/m rise in …
Inflation coming down but Riksbank to hike by 25bp Headline inflation fell back into single digit territory in May, but the underlying rate came down a bit less than anticipated. This suggests there are upside risks to our forecast that the Riksbank will …
While selling its exchange-traded fund (ETF) holdings at book value to the government wouldn’t impair the Bank of Japan’s balance sheet, we don’t think it would provide the boost to fiscal revenue that policymakers seem to be hoping for. And while the …
Inflation coming down but Riksbank to hike by 25bp Headline inflation declined as expected in May but the underlying measure fell a bit less than anticipated and points to upside risks to our forecast that the Riksbank will raise interest rates just once …
Resurgence in activity unlikely to last The 0.2% m/m rise in real GDP in April will further raise hopes that the economy will escape a recession this year. But the rise in GDP is not as good as it seems. And with the full drag from high interest rates …
We think UK real GDP rose a bit in April (07.00 BST) Euro-zone industrial production probably edged up in April (10.00 BST) We expect the Fed to leave interest rates unchanged (19.00 BST) Key Market Themes The 10-year Gilt yield has continued to march …
13th June 2023
The latest OPEC oil market report confirms that OPEC countries implemented a fresh round of voluntary production cuts in May, slashing the group’s crude output by 0.4m bpd. Similar to OPEC’s own view on the oil market, we think that it will tighten …
The latest OPEC oil market report confirms that OPEC countries implemented a fresh round of voluntary production cuts in May, slashing the group’s crude output by 0.4m bpd. Similar to OPEC’s own view on the oil market, we think that it will tighten later …
With inflation still running hot, the Bank of England has little choice to keep raising interest rates. But how high will policymakers take Bank Rate, and – with headlines dominated by news of 6% mortgage rates – what will that mean for the UK economic …
Core inflation still uncomfortably high Headline CPI inflation fell to a more than two-year low of 4.0% in May, thanks to favourable base effects and another sharp drop back in energy prices last month but, with core price inflation still as high as …
Click here to read full text. Overview – Sub-Saharan Africa is set to record its weakest growth this year, outside of the pandemic, since 2016 as the drags from domestic headwinds are exacerbated by a less favourable external environment. Our GDP growth …
Core inflation remains uncomfortably high for the Fed Headline CPI inflation fell to a more than two-year low of 4.0% in May, thanks to favourable base effects and another sharp drop back in energy prices last month but, with core price inflation still as …
Borrowing curbed in response to rising interest rates With mortgage rates surging, the number of loans issued to buy a home dropped sharply in Q1, with Buy-to-Let (BTL) lending seeing the most severe drop. Those that did press ahead with a home purchase …
We think an upcoming shift in emerging market monetary policy towards rate cuts will provide long-dated local-currency government bonds there with a bit of a tailwind. But gains may be limited in the coming months if, as we expect, global appetite for …
The Polish government’s ambitious plans to raise defence and social spending are unlikely to be achieved without pushing up the public debt-to-GDP ratio later this decade. Imminent risks to the sustainability of the public finances still appear relatively …
This page has been updated with additional analysis and charts since first publication. A worrying deceleration Broad credit growth slowed sharply in May and has now reversed almost all its reopening recovery. This poses a downside risk to growth and …
Reacceleration in wage growth supports the case for further rate hikes Note: We’ll be discussing the Fed and ECB June decisions and previewing the Bank of England's upcoming meeting in a briefing at 10:00 EDT/15:00 BST on 15 th June. Register here . The …
Activity growing at a more subdued pace The latest industrial production and retail sales data for Turkey for April suggest that GDP growth is likely to have remained subdued this quarter following the Q1 slowdown. A shift towards economic orthodoxy – …
Reacceleration in wage growth supports the case for further rate hikes The labour market became tighter in April and wage growth reaccelerated. That will only add to the heat already on the Bank of England to raise interest rates further at the policy …
This report was first published in response to the PBOC’s cut to its 7-day reverse repo rate. It has since been updated to reflect subsequent developments. 13th June: Additional analysis and charts added. 15th June: Coverage of MLF cut added. 20th June: …
One reason for the slump in productivity is that the recent surge in working hours is producing diminishing returns. And we suspect that disruptions caused by the pandemic prevented firms from stepping up business investment in response to record capacity …
UK wage growth probably accelerated in April (07.00 BST) We think US core inflation eased to an 18-month low of 5.2% in May… (13.30 BST) … and the headline inflation rate may have fallen to 4.1% (13.30 BST) Key Market Themes Emerging Market (EM) …
12th June 2023
Overview – The RBI’s tightening cycle has come to an end and, as the economy comes off the boil and inflation settles at comfortable rates, we think interest rates cuts will materialise in early 2024. Over the longer term, India’s growth prospects are …
Pakistan’s central bank (SBP) left its main policy rate unchanged today at 21%, but we think this represents a pause rather than an end to the SBP’s tightening cycle. With inflation well above target and concerns about the external position unlikely to …
With less than a year and a half to go until the next general election, calls for the Chancellor, Jeremy Hunt, to cut a range of taxes have been growing. But recent economic developments mean the Chancellor is unlikely to have much fiscal firepower …
Saudi Arabia’s fiscal position has deteriorated over the past few quarters on the back of lower oil prices and production, and officials are increasingly doing all they can to sustain the current loose fiscal stance. But if, as we expect, oil prices fall …
Headline inflation to remain anchored within the RBI’s 2-6% target range Headline consumer price inflation fell to a 25-month low in May and is likely to remain within the RBI’s 2-6% target range for the foreseeable future. That means the tightening cycle …
Surprise increase in lending in May, but signs of distress growing While bank net lending to commercial real estate (CRE) turned positive again in May, growing signs of distress for existing loans point to further weakness ahead. (See Chart 1.) The …
