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For an updated and more detailed version of this analysis, click here . More rate cuts coming, but not as quickly as the markets expect While cutting interest rates from 4.50% to 4.25% today, the Bank of England poured some cold water on the markets’ …
8th May 2025
Riksbank leave rates unchanged, but signals cuts may be coming While the Riksbank left its policy rate unchanged at 2.25% today, policymakers indicated that a rate cut is likely this year given the weakness of the economy. We now think that they are …
This page has been updated with additional analysis since first publication. Tentative evidence that house price falls are over The 0.3% m/m rise in Halifax house prices (consensus forecast -0.1% m/m, CE 0.0% m/m) provides tentative evidence that the …
Rebound in German industry unlikely to last The big rise in German industrial output and orders in March confirms that conditions in the sector have stabilised in recent months. However, some of the strength might be due to tariff front running. And with …
NBP cuts by 50bp ... but easing cycle may be more limited than most expect The decision by the National Bank of Poland (NBP) to cut its policy rate by 50bp today, to 5.25%, rather than opt for a smaller 25bp cut, suggests a slightly more dovish balance on …
7th May 2025
CNB cuts by 25bp, but easing cycle may now be over The Czech National Bank (CNB) cut its policy rate by 25bp today, to 3.50%, but we think that this may mark the end of its easing cycle. Our forecast for the policy rate to remain on hold at 3.50% over the …
Retail sales edged down in March This publication has been updated with additional analysis Euro-zone retail sales declined in March, reversing part of the increase in February. We expect spending growth to remain weak for the rest of the year as any …
Increased uncertainty weighs on commercial construction The headline CIPS construction PMI edged up to 46.6 in April, from 46.4 in March. That left the balance below 50 and consistent with a contracting construction sector. A small rise in the housing and …
Inflation lower than expected, but the core rate to remain high for rest of year Sweden’s CPIF inflation was unchanged in April which will give the Riksbank little cause for concern going into its policy decision tomorrow. We expect it to keep the policy …
Merz significantly weakened by first round election failure The failure of CDU leader Friedrich Merz to be elected Chancellor in the first round of voting will probably not prevent him and the Grand Coalition from taking power in the coming days or weeks. …
6th May 2025
Simion’s lead leaves Romania on the verge of a big political shift Far-right candidate George Simion emerged as the clear frontrunner in the first round of Romania’s rescheduled presidential election and is now the favourite to win the second round on 18 …
5th May 2025
Easter-driven rise in services inflation won’t concern ECB April’s rise in services inflation is unlikely to worry the ECB too much as it was probably driven mainly by Easter timing effects. We think services inflation will start falling again in the …
2nd May 2025
PMIs not as good as they look The manufacturing PMIs across Central and Eastern Europe (CEE) held up relatively well in the face of higher US tariffs, but forward looking components of the surveys suggest conditions may deteriorate ahead. Meanwhile, price …
Net lending to property falls back Net lending to property weakened to a one year low in March, with total lending of £514m down from £1.59bn in February. The drop was driven by lending to standing investments, which fell to £530m from £1.49bn. Debt …
1st May 2025
This page has been updated with additional analysis since first publication. Households tighten their purse strings March’s money and lending data suggest households were starting to spend more cautiously even before the full hit to consumer confidence …
Euro-zone inflation probably unchanged in April, but will fall further this year National data published so far suggest that euro-zone inflation remained at 2.2% in April, and that core inflation probably rose from 2.4% to 2.6%. (Euro-zone data due on …
30th April 2025
Strong start to the year but tariff-induced slowdown ahead The acceleration in euro-zone GDP growth in Q1, to 0.4% q/q, suggests the economy started the year on a stronger footing than we expected and activity surveys suggested. Nevertheless, we still …
This Rapid Response has been amended from our original response to correct the food CPI figure. Fall in inflation paves the way for May rate cut The larger-than-expected fall in Polish inflation, to 4.2% y/y, in April, is probably enough to tip the …
Hungary contracts ahead of tariff impact The Q1 GDP data released out of Hungary and Czechia showed that momentum in both economies slowed at the start of this year, with Hungary suffering a renewed contraction. The risks to our below consensus full-year …
This page has been updated with additional analysis since first publication. House price growth slows as stamp duty relief ends April’s bigger-than-expected 0.6% m/m fall in Nationwide house prices (consensus forecast 0.0% m/m, Capital Economics -0.1% …
MNB to stay on hold as above-target inflation persists The Hungarian central bank (MNB) left its base rate on hold today, at 6.50%, and despite downside risks to activity from US tariffs, we think its easing cycle will remain on pause throughout 2025. …
29th April 2025
This publication has been updated with additional analysis ESI points to small hit from tariffs in April The ESI for April point to a small hit to the euro-zone from US tariffs in April and suggest that growth remained quite weak. With the drag from …
Sentiment holds up well in the face of Trump’s tariffs The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) provide a tentative sign that the impact of US tariffs on the region has been fairly contained so far. The …
Spain’s economy to stay strong this year, but Sweden’s may struggle Spain’s rapid economic growth (+0.6% q/q in Q1) is likely to continue for some time yet, despite trade uncertainty. While consumption and government spending were weaker than expected in …
CBR drops tightening bias, rate cuts likely in Q3 The Central Bank of Russia (CBR) left its policy rate on hold at 21.00% again today and dropped the language in its statement that further interest rate hikes are possible. With inflation nearing a peak, …
25th April 2025
This page has been updated with additional analysis since first publication. March may be as bright as it gets as confidence slides March’s rise in retail sales volumes meant sales rebounded by an impressive 1.6% q/q in Q1, rounding off a …
Ifo resilient in the face of tariffs The rise in the Ifo Business Climate Index (BCI) in April suggests that US tariffs have not yet meaningfully hit economic activity in Germany, though some sentiment indicators have fallen sharply. But the economy is …
24th April 2025
This page has been updated with additional analysis since first publication. Tariffs dampening activity but not yet inflation The marked fall in the composite PMI in April raises the chances that the uncertainty stemming from the US tariffs chaos will be …
23rd April 2025
Hit from tariff chaos looks small so far but could get bigger April’s euro-zone flash PMIs suggest that the immediate damage to production from US trade policy has been limited so far. But firms reported some front-loading of orders, so output might take …
This page has been updated with additional analysis since first publication. Fiscal position worse than OBR predicted even before US tariffs bite March’s public finances figures showed that public borrowing was overshooting the OBR’s forecast even before …
Odds of a May rate cut shorten The weaker-than-expected Polish industrial production and wage data for March have increased the probability that the central bank (NBP) will restart its easing cycle at its next meeting in May, but that decision will still …
22nd April 2025
ECB acknowledges downside risks from trade uncertainty While the ECB’s decision to cut its deposit rate from 2.5% to 2.25% today was expected, the monetary policy statement clearly points to further policy easing to come. The statement says the outlook …
17th April 2025
CBRT signals tight policy here to stay The decision by the Turkish central bank (CBRT) to hike its one-week repo rate by 350bp, to 46.00%, formalises the emergency monetary tightening delivered last month and is a strong signal of commitment to a tight …
This page has been updated with additional analysis since first publication. Dip in inflation won’t last, but weak economy will quash inflation eventually The dip in CPI inflation from 2.8% in February to 2.6% in March (CE forecast 2.6%, consensus 2.7%) …
16th April 2025
Outlook clouded by tariff tensions This publication has been updated with additional analysis The increase in euro-zone industrial production for a second consecutive month in February is not a sign of a sustained recovery for the sector. Instead, it is …
15th April 2025
This page has been updated with additional analysis since first publication. Jobs growth weakens with more to come While the jobs market weakened further, there were few signs this is feeding through to slower wage growth. But if the more uncertain …
This page has been updated with additional analysis since first publication. Surprisingly strong growth to prove short-lived, as rises in tariffs and taxes bite The surprisingly strong 0.5% m/m rise in GDP in February (consensus +0.1%, CE 0.0%) and the …
11th April 2025
Israel holds rates steady ahead of Trump-Netanyahu talks The Bank of Israel (BoI) left its policy rate on hold again today, at 4.50%, and sounded a bit more hawkish than at its previous meeting despite highlighting possibly quite a large hit to economic …
7th April 2025
Tariffs unlikely to bring forward rate cuts The communications accompanying the decision by the National Bank of Romania (NBR) to leave its policy rate on hold today, at 6.50%, highlighted two-sided risks to inflation and economic activity from US trade …
Retail sales picked up in February This publication has been updated with additional analysis Euro-zone retail sales rose in February for the first time since September last year, and we expect consumer spending to grow at a modest pace over the coming …
This page has been updated with additional analysis since first publication. Housing market loses steam in Q1 The 0.5% m/m fall in Halifax house prices in March provides further evidence that the boost from buyers rushing to complete home purchases before …
German industry already weak of tariff hit The fall in German industrial production in February left it very weak. With US demand generating around 7% of German manufacturing value added, the sector will be hit hard by US tariffs. And higher defence and …
Rising interest rates and costs weigh on construction activity The headline CIPS construction PMI saw a small rise in March to 46.4, from 44.6 in February. But that still left the balance below 50 and consistent with a contracting construction sector. …
4th April 2025
Underlying inflation to remain elevated for the rest of the year Despite easing in March, CPIF inflation excluding energy remained elevated and is likely to remain high throughout this year. We are forecasting the Riksbank to keep its policy rate at 2.25% …
Softer inflation gives CBRT some breathing space The softer-than-expected Turkish inflation figure for March, of 38.1% y/y, suggests that the sell-off in the lira last month hasn’t exerted significant upwards pressure on consumer prices (yet). And as …
3rd April 2025
This page has been updated with additional charts and analysis. Inflation steady, but outlook weaker on tariffs Switzerland’s inflation rate was unchanged in March, but that news has been overshadowed by the much higher-than-expected tariffs announced by …
NBP remains on hold, although case for rate cuts starting to build The National Bank of Poland (NBP) left is policy rate on hold again today, at 5.75%, and while our forecast is for policy settings to remain unchanged throughout 2025, the risks of an …
2nd April 2025
Services inflation down sharply March’s big decline in euro-zone services inflation strengthens the case for the ECB to cut interest rates at the meeting on 17 th April. The small fall in euro-zone headline inflation from 2.3% in February to 2.2% in March …
1st April 2025
Central Europe recovering, Russia faltering The rise in the manufacturing PMIs in Central Europe in March adds to evidence that the region is recovering from its recent soft patch. In contrast, the drop in Russia’s PMI suggests the economy may be starting …
This page has been updated with additional analysis since first publication. House prices continue to lose momentum The stagnation in Nationwide house prices in March suggests any boost from buyers rushing to complete home purchases ahead of the rise in …
