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 …
20th June 2025
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 …
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% …
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 …
19th June 2025
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 …
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 …
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 …
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 …
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
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 …
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 …
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 …
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 …
17th June 2025
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 …
Bank of Japan will hike rates again before year-end The Bank of Japan decided to reduce its bond purchases at a slower speed from next year but gave little away in terms of the outlook for interest rates. With inflation set to surpass the Board’s …
Consumption holds up, but broader economy still fragile The US-China trade truce was not enough to prevent a broader loss of economic momentum last month. With tariffs set to remain high, fiscal support waning and structural headwinds persisting, growth …
16th June 2025
Tariff and inflation fears ease substantially The stronger-than-expected June University of Michigan consumer sentiment index suggests that, despite ongoing policy uncertainty, consumers have become much less worried about both tariffs and inflation. …
13th June 2025
Add manufacturing to list of weak areas in the economy Manufacturing sales volumes plunged in April as the temporary boost to exports from tariff front-running unwound. Prospects for a meaningful rebound over the coming months look slim, with new orders …
Private demand continues its decline Bank loan growth continued to slow last month, but broad credit growth held steady, thanks to the continued strength of non-bank borrowing. With deflation keeping real lending rates elevated, despite the recent small …
A third target-consistent gain in core PCE deflator The softer-than-expected PPI data mean we now estimate that core PCE prices rose by 0.16% m/m in May, marking the third consecutive target-consistent gain. Much like for the CPI, there was only limited …
12th June 2025
Headline inflation drops to 75-month low; has now bottomed out India’s headline consumer price inflation fell to a 75-month low of 2.8% y/y in May. Inflation may now have bottomed out, but we think it will rise only very gradually back towards the Reserve …
This page has been updated with additional analysis since first publication. Economy coming back down to earth The fall in GDP in April supports our view that the strength of the economy in Q1 was a red herring and that GDP growth will be more subdued …
Trump 1 - 0 Economists The muted 0.1% m/m rise in the core CPI in May is not quite as good as it looks, with our preliminary estimate pointing to a 0.20% rise in the Fed’s preferred core PCE deflator ahead of the PPI data tomorrow. Nonetheless, the data …
11th June 2025
Inflation drops, but Copom likely to hike one final time next week The slightly larger-than-expected fall in Brazil’s headline inflation, to 5.3% y/y, was driven by weaker food inflation. Underlying price pressures continued to strengthen and, against …
10th June 2025
This page has been updated with additional analysis since first publication. Looser labour market driving softer wage pressures With payrolls plunging, the unemployment rate climbing and wage growth easing, today’s labour market release leaves us more …
Inflation rise won’t prevent further cuts from Banxico Mexico’s headline inflation rate jumped to 4.4% y/y in May but this was mainly driven by stronger non-core prices and so is unlikely to trouble officials at the central bank. Indeed, with the economy …
9th June 2025
US tariffs start to weigh on overall exports The slowdown in export growth in May should partially reverse this month, as it reflects the drop in US orders before the trade truce, which took time to feed through to actual shipments. But with tariffs …
Overcapacity set to keep China in deflation Headline inflation remained in negative territory last month but core inflation continued to recover and is now at its highest in almost a year. This improvement looks fragile, however, and we still think …
Labour market continuing to struggle The rise in employment in May was better than expected but, paired with recent data, still shows that the labour market is struggling. We are therefore sticking to our view that the Bank of Canada will cut interest …
6th June 2025
Tariffs taking only a limited toll The 139,000 gain in non-farm payrolls was not as good as it looks, given its narrow breadth and the 95,000 downgrade to payroll gains over the prior two months. Nevertheless, it shows that tariffs are having little …
CBR delivers dovish surprise as overheating pressures ease The decision by the Central Bank of Russia (CBR) to cut its policy rate by 100bp today, to 20.00%, came as a dovish surprise, and we now think the policy rate will now end this year at 17.00% …
Euro-zone GDP and Employment (Q1 2025) Front-running boost will be unwound in second quarter The upward revision to euro-zone Q1 GDP growth to 0.6% q/q from 0.3% is largely due to a surge in pharmaceutical exports which we already know is being reversed …
This page has been updated with additional analysis since first publication. We’ll be discussing the outlook for fiscal policy and the economy shortly after the Chancellor’s Spending Review is released in a 20-minute online Drop-In at 3pm BST on Wednesday …
Tariff front-running already reversing German industrial production and export figures for April suggest that the boost to activity from US tariff front running is already reversing and that underlying industrial activity remains weak. With US tariffs …
RBI ends easing cycle with a bang The Reserve Bank of India’s (RBI’s) decision to cut the repo rate by a larger-than-expected 50bps (to 5.50%) while also changing its policy stance from “accommodative” to “neutral” today are clear indications that it has …
Trade deficit narrows dramatically, as tariffs end import surge The huge narrowing of the trade deficit in April was largely driven by a steep drop in pharmaceutical product and gold bullion imports, reversing their earlier surge as tariff front-running …
5th June 2025
Reversal of tariff front-running sends deficit to record high The jump in the trade deficit to a record high in April was larger than expected as tariff front-running reversed with “Liberation Day” and Canadian exporters paused to make more of their …
ECB likely to cut further The ECB’s decision to cut the deposit rate by 25bp to 2.0% and give no clear signals about the future path of monetary policy was in line with expectations. We forecast one more rate cut in the second half of the year with risks …
Updated Q1 Ireland data to prompt massive revision to euro-zone outturn We think that the huge upward revision to Ireland’s Q1 GDP data this morning, to show a rapid expansion that was in large part driven by tariff front-running, will lead to euro-zone …
Construction activity improves as tariff uncertainty falls back The headline CIPS construction PMI rose for the third consecutive month in May, although the rise from 46.6 to 47.9 still suggests that construction activity is contracting. Within the …
Wage pressures showing signs of strengthening With base pay growth on a new upswing, we think the Bank of Japan will restart its hiking cycle before long. According to today’s preliminary estimate, growth in labour cash earnings remained unchanged at 2.3% …
Tariffs causing problems for the service sector The surprise fall in the ISM services index for May suggests that tariff effects are weighing on activity outside of the manufacturing sector, but the Fed is likely to be more concerned by the further rise …
4th June 2025
Rate cuts delayed, but still coming The Bank of Canada avoided surprising markets by keeping interest rates unchanged at 2.75% today, as it continues to wait to see what the full impact of uncertain US trade policy on the economy will be. The accompanying …
