Underlying economic growth remains solid The 2.3% annualised gain in fourth-quarter GDP was a little weaker than the consensus estimate at 2.6%, but expectations would have come down a little after the December advance economic indicators showed a big …
30th January 2025
ECB has much further to go The ECB’s decision to cut its deposit rate from 3% to 2.75% today came as no surprise and the accompanying statement implies that more cuts are coming, as is widely anticipated. We think the Bank will have to lower interest …
GDP collapse argues for larger 50bp cut The much larger-than-expected 0.6% q/q drop in Mexico’s GDP in Q4 is likely to strengthen the argument for a 50bp interest rate cut, to 9.50%, at next week’s Banxico meeting. That now looks like the most likely …
Weak economy means ECB will keep cutting The stagnation in euro-zone GDP in Q4 supports our view that the region’s economic prospects are worse than most think. We expect this to prompt the ECB to cut interest rates by more this year than is discounted in …
Net lending to property records strongest year since 2008 Net lending to property had a strong end to 2024, with the total of £1.28bn in December the highest since September. At £11.5bn for the year, commercial property net lending had its strongest year …
This page has been updated with additional analysis since first publication. Downbeat outlook isn’t heavily weighing on households’ financial decisions December’s money and lending figures suggest the downbeat economic outlook isn’t weighing on households …
Signs of improvement, but growth still likely to underwhelm in 2025 GDP data released out of Hungary and Poland today were broadly in line with expectations and suggest that both their economies returned to positive growth at the end of last year, but we …
Germany, France and Italy all weighing on euro-zone growth With national data now available for all larger euro-zone countries, it looks as if GDP growth in the region slowed to 0.1% q/q or even zero in Q4 last year. (Euro-zone GDP data are out at 10.00 …
A softer end to 2024 Saudi Arabia’s flash estimate of GDP showed that the economy grew by just 0.3% q/q in the final quarter of 2024, marking the slowest rate of expansion in a year. We think GDP growth will accelerate this year as oil output cuts are …
Interest rate cuts to support growth in 2025 GDP growth in the Philippines picked up slightly in the final quarter of last year, and we expect decent growth in 2025 as interest rate cuts help offset the drag from weaker exports and tighter fiscal policy. …
Copom sticks to its promise Brazil’s central bank delivered on its pledge to deliver another 100bp hike to the Selic rate, to 13.25%, and another 100bp increase at March’s Copom meeting is all but certain. For now, we are sticking with our view that that …
29th January 2025
Fed moves to the sidelines The Fed left its key policy rate unchanged at between 4.25% and 4.50% and the accompanying statement suggests the FOMC is happy to remain on the sidelines, as it awaits more clarity on the potentially stagflationary mix of …
Bank cuts by 25bp as 25% tariff threat hangs over the economy With the economy doing better recently, the Bank of Canada’s decision to cut by 25bp today might have been a much closer call were it not for the looming threat of US tariffs. Any tariffs could …
This page has been updated with additional analysis Riksbank makes final rate cut of the cycle We think that the Riksbank will keep its policy rate at 2.25% for the foreseeable future after delivering a 25bp cut today. While there is a lot of uncertainty, …
Spain’s strong growth showing no signs of abating The 0.8% q/q increase in Spain’s GDP in Q4 2024 was a bit stronger than expected as the economy brushed off the negative effects of the flooding in Valencia. The economy is likely to continue to increase …
Soft CPI data paves the way for RBA to cut in February With underlying inflation on track to enter the RBA’s 2-3% target band this quarter, we now expect the Bank to begin its easing cycle at its next meeting in February. The 0.2% q/q rise in consumer …
Housing market continues to cool The modest rise in house prices in November adds to the sense that the housing market is experiencing a bit of a slowdown amid weak buyer demand and gradually rising supply. We think this trend has a bit further to run, …
28th January 2025
Fourth-quarter business equipment investment set to decline The fall in durable goods orders in December was due to the volatile transport component, whereas core and underlying capital goods orders both rose. While real underlying capital goods shipments …
MNB waiting patiently to resume the easing cycle The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think that the inflation backdrop will result in less easing over the rest of the year than most expect. Today’s …
Newbuild demand remains a bright spot in otherwise frozen market The 3.6% increase in new home sales in December wraps up a solid year for newbuild demand in an otherwise stagnant housing market, with sales up nearly 3% over 2024 as a whole. We expect new …
27th January 2025
German economy starts year on weak footing The Ifo Business Climate Index (BCI) remained in contractionary territory in January which supports the consensus and our own view that that Germany will eke out only a small expansion in GDP this year. The …
Small rise in sales does not mark beginning of the recovery The small rise in existing home sales in December reflects deals that came together in September and October, when mortgage rates hit a nadir of 6.2%, getting across the line. Given the recent …
24th January 2025
Inflation eases, but Copom still set to deliver 100bp hike next week Brazil’s headline inflation rate eased to 4.5% y/y in the first half of January, but signs that underlying price pressures continued to build mean that Copom will press ahead with …
This page has been updated with additional analysis since first publication. Stagflation concerns remain at the start of 2025 Despite the small rise in the composite activity PMI from 50.4 in December last year to 50.9 in January, at face value it is …
This page has been updated with additional analysis since first publication. Growth remained sluggish in January We expect data released next week to show that the euro-zone economy grew by only 0.1% q/q in Q4, and January’s PMIs point to a similarly poor …
Strong exports and investment supporting the economy Taiwan’s economy picked up in Q4, and we expect GDP growth to remain robust over the coming quarters, helped by continued strong growth in information and communication technology exports. The advance …
Bank of Japan will lift policy rate to 1.25% next year The Bank of Japan hiked its policy rate to 0.5% today and we think it will lift it to an above-consensus 1.25% by the middle of next year. The Bank’s decision to resume its tightening cycle with a …
MAS loosens policy, further easing likely amid low inflation Singapore’s central bank loosened monetary policy today and with inflation likely to remain low and economic growth soft, we expect further easing in the coming quarters. The MAS conducts …
Flash PMI points to pick-up in activity this quarter The continued rise in the composite PMI to its highest point since Q3 last year supports our view that activity will pick up again this quarter. Today’s flash estimate showed that the manufacturing PMI …
Strength in underlying inflation points to further tightening The acceleration in headline inflation and strength in underlying inflation in December should add to the Bank’s confidence that it can resume rate hikes today and over the coming months. In …
23rd January 2025
The news from Davos that President Trump will “ask Saudi Arabia and Opec to bring down the cost of oil” is certainly in keeping with his desire for lower gasoline prices and his clear intention to use energy as leverage over Russia to end the war in …
Heading for another strong quarter On the surface, the 0.4% decline in retail sales volumes in November looks worrying, but that fall partly reflects households delaying purchases ahead of the December GST holiday. Encouragingly, November’s drop appears …
Easing inflation makes February cut highly likely The fall in Mexican inflation in the first half of January, to 3.8% y/y, means that Banxico is likely to continue its easing cycle next month. But with the Fed set to pause its pause its cutting cycle and …
250bp cut likely to be follow with another in March The 250bp interest rate cut by Turkey’s central bank (CBRT), to 47.50%, was accompanied by cautious language in the statement. But given signs that underlying inflation pressures are easing , we think …
Norges Bank to start cutting in March Today’s policy announcement confirms that Norges Bank is likely to start cutting interest rates at its meeting in March. We think it will then loosen monetary policy a little more quickly than its latest projections …
Korea’s economy continued to struggle in Q4 and we suspect that the weakness in activity could persist in the near term due to the ongoing political crisis and the bleak outlook for the construction sector. Data released today show that GDP growth …
22nd January 2025
Inflation edges up but SARB to continue with cuts in 2025 The smaller-than-expected rise in South Africa’s headline inflation rate, to 3.0% y/y, in December, combined with the recent recovery in the rand, supports our view that the SARB can continue with …
Rates on hold (again), prolonged hold likely Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, and hinted that it was in no hurry to change rates anytime soon. The decision comes as no surprise – the outcome was correctly …
This page has been updated with additional analysis since first publication. Figures not as bad as they appear but challenges remain Against a backdrop of slowing GDP growth and high interest rates, December’s overshoot in borrowing is further …
This page has been updated with additional analysis since first publication. With price pressures continuing to abate, the RBNZ should have no qualms about cutting rates by another 50bp at its meeting next month. The 0.5% q/q rise in consumer prices last …
21st January 2025
Concerning signs despite GST-related fall in headline inflation The small fall in headline inflation to 1.8% in December is not as encouraging as it looks, with the details suggesting that a higher proportion of the GST holiday was captured by the price …
This page has been updated with additional analysis since first publication. UK wage growth rebounds further, but there are signs of cooling further ahead While the further rise in regular private sector pay growth in November will cause the Bank of …
Manufacturing output rebounds The strong rise in industrial production in December is consistent with the recent improvement in the survey evidence. However, we do not think this marks the beginning of a sustained recovery in the manufacturing sector. The …
17th January 2025
Jump in starts consistent with growing optimism among builders The large rebound in housing starts and continued resilience of building permits in December provides some support to our forecast that starts will remain solid in the first half of the year. …
Tighter fiscal policy to weigh on growth Economic growth in Malaysia softened in Q3 and we expect a year of fairly subdued growth ahead as tight fiscal policy weighs on demand. According to the advanced estimate published today, GDP growth eased to 4.8% …
This page has been updated with additional analysis since first publication. Disappointing Q4 not a sign of things to come December’s 0.3% m/m fall in retail sales volumes was worse than expected (consensus forecast +0.4% m/m, CE 0.0% m/m) and rounded off …
Fiscal-driven recovery will be short-lived The economy ended 2024 on a stronger note, thanks to tailwinds from recent policy easing. Increased fiscal spending should continue to provide a near-term prop to activity, but this won’t prevent growth from …
Strong control group bodes well for Q4 GDP The 0.4% m/m increase in retail sales in December was a little weaker than expected, with the consensus forecast as high as 0.6%, but this was actually a strong report that boosts our fourth-quarter GDP growth …
16th January 2025
NBP keeps rates on hold, probably for the whole year The National Bank of Poland (NBP) left its policy rate on hold again today, at 5.75%, and the inflation backdrop is likely to prevent the restart of the easing cycle for some time. We don’t expect …
Economy still at risk of contracting in Q4 While the smaller-than-expected 0.1% m/m rebound in GDP in November (consensus and CE forecast +0.2% m/m) offset the 0.1% m/m decline in activity in October, it’s clear that the economy has a bit less momentum …
