Rates on hold with CBN in wait-and-see mode The Central Bank of Nigeria left its policy rate on hold at 27.50% today and, with the disinflation progressing slowly and concerns that low oil prices will put downward pressure on the naira, it looks like it …
20th May 2025
Sharp drop in headline rate masks hot underlying inflation The removal of the carbon tax sent energy prices tumbling in April, pushing headline inflation below the 2% target. More concerningly, the Bank’s preferred CPI-trim and CPI-median core measures …
RBA cuts by 25bp, leaves the door open for further easing With the Bank growing increasingly concerned about downside risks to the economy, there is a good chance that it will cut rates further than we are currently anticipating this cycle. The RBA’s …
PBOC’s easing will confer only marginal benefits Today’s reductions to both the one-year and five-year Loan Prime Rates (LPR) probably won’t be the last this year. But rate cuts are likely to remain modest as the PBOC appears to think they could hinder …
A strong start to the year The stronger-than-expected 0.7% q/q expansion in Chile’s economy in Q1 on the back of robust domestic demand supports our view that Chile’s central bank will leave its policy rate on hold for a bit longer. But the recent dovish …
19th May 2025
Economic growth in Thailand accelerated in Q1 but we think growth over the rest of the year will be rather weak as the boost from stronger public consumption is likely to be offset by weakness in other components of GDP. The 0.7% q/q rise in GDP in Q1 …
Trade war starts to take its toll After an improvement in March, China’s economy looks to have slowed again last month, with firms and households turning more cautious due to the trade war. While the recent US-China tariff de-escalation will alleviate …
Sharp contraction at the start of the year The sharp slowdown in Russian GDP growth from 4.5% y/y in Q4 to 1.4% in Q1 is consistent with a sharp fall in output and suggests that the economy may be heading for a much harder landing than we had expected. …
16th May 2025
Consumers remain uneasy despite the tariff pause The weaker-than-expected May print of the University of Michigan consumer sentiment index was driven by a further increase in inflation expectations and suggests households remain wary about the tariff …
Tariffs starting to weigh on residential construction The small rebound in housing starts in April is more troubling than it appears, as it barely recoups the sharp, weather-related decline seen in March and conceals renewed weakness in both single- and …
Risks now skewed towards hikes rather than further cuts The National Bank of Romania (NBR) highlighted concerns with the uncertain political backdrop and recent pressure on the currency when leaving its policy rate on hold today, at 6.50%. We now think …
Weaker growth to prompt rate cuts later this year GDP growth in Malaysia slowed in the first quarter, and we think the economy will struggle this year, opening the door for the central bank to cut interest rates. According to the second estimate published …
GDP growth set to remain sluggish this year With the economy already shrinking on the eve of the trade war, the Bank of Japan will probably wait even longer before resuming its tightening cycle than we had anticipated. The 0.2% q/q fall in Q1 GDP was …
Growth concerns leave the door open for another 50bp cut in June Mexico’s central bank (Banxico) lowered its policy rate by another 50bp, to 8.50%, at today’s meeting and the accompanying communications underlined that policymakers’ concerns have shifted …
15th May 2025
Production flat but positive signs At face value, the stagnation of industrial production in April and the fall in manufacturing output suggest that tariffs are weighing on domestic production. However, some of this is due to an unwinding of tariff …
Retail sales and PPI show few signs of adverse tariff impact Despite fears raised by the slump in sentiment, retail sales edged up by 0.1% m/m in April, following a massive 1.7% m/m gain the month before. Admittedly, control group sales fell by 0.2% m/m …
Sharp drop in manufacturing sales volumes The sharp decline in manufacturing sales volumes in March suggests the earlier boost from US tariff front-running is now reversing. A modest rise in new orders supports our view that the watered-down tariffs that …
This page has been updated with additional analysis since first publication. GDP growth likely to slow again Euro-zone GDP growth was revised down to 0.3% q/q in Q1 but the underlying picture was weaker than this and we expect growth to slow again the …
Growth slows across CEE ... but Poland beats expectations The Q1 GDP data released in Central and Eastern Europe (CEE) today confirmed that growth slowed across the region ahead of the introduction of US tariffs. That said, Poland’s relatively strong …
Inflation holds steady This response has been updated with analysis of wholesale prices and content. Saudi Arabia’s headline inflation rate was unchanged at 2.3% y/y in April, its joint fastest pace in nearly two years. We think that inflation will hover …
Bumper growth suggests SNB will cut by just 25bp next month Switzerland’s GDP growth shocked to the upside in the first quarter and grew by 0.7% q/q, shaking off concerns that trade uncertainty would weigh on the economy. This means the SNB is more likely …
This page has been updated with additional analysis since first publication. A temporary burst rather than a sign of a fundamentally stronger economy The bumper 0.7% q/q rise in GDP in Q1 is unlikely to be repeated as a lot of it was due to a leap in …
Labour market continues to fire on all cylinders With the labour market going from strength to strength, we’re more convinced than ever that the RBA will be reluctant to cut rates aggressively. Accordingly, we’re sticking to our forecast for a terminal …
Fiscal spending propping up credit growth Bank loan growth resumed its slowdown last month, but broad credit growth continued to accelerate on the back of a surge in government bond issuance. While monetary easing should help drive up private credit …
14th May 2025
Wage growth should moderate again before long The pick-up in wage growth in Q1 won’t prevent the RBA from cutting interest rates next week but it will limit the scope of additional easing thereafter. The 0.9% q/q rise in the wage price index last quarter …
Little sign of tariff effects yet The CPI data suggest that core PCE prices rose at a target-consistent rate in April for the second month running, although it is likely to be a different story this month as tariff effects start to feed through. The 0.24% …
13th May 2025
Inflation at six-year low strengthens case for more interest rate cuts The slight fall in India’s consumer price inflation in April, which pushes it further below the Reserve Bank of India’s (RBI’s) 4% target, supports our view that the central bank will …
This page has been updated with additional analysis since first publication. Sticky wage growth will mean the Bank of England remains cautious The jobs market weakened further in the face of April’s rise in payroll taxes and the national minimum wage. But …
Tariffs weigh hard on manufacturing employment Employment would have fallen again in April were it not for the boost from the federal election, which supports our view that the Bank of Canada will resume its loosening cycle next month and ultimately cut …
9th May 2025
This page has been updated with additional analysis since first publication. Exports holding up, for now Export growth slowed by less than most had anticipated in April, as the drop in export orders from the US is taking time to feed through to actual …
Weakness in regular earnings very difficult to explain We still believe that the labour cash earnings figures are understating the strength of wage growth but taken at face value they reduce chances of further tightening by the Bank of Japan. According to …
The “full and comprehensive” trade deal between the US and the UK announced in a rush today by President Donald Trump and PM Keir Starmer is no such thing. As Trump admitted in his press conference, the “final details” still need to be “written up in the …
8th May 2025
Inflation rises, but Banxico still on course for a 50bp cut next week Mexico’s headline inflation rate edged up to 3.9% y/y in April, but we think that the challenging growth outlook and the relative resilience in the peso leave the door open for another …
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’ …
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 …
Rates on hold (again), but rate cuts are coming Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, but sounded more downbeat on the economic outlook, suggesting scope for rate cuts later in the year. The decision was correctly …
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 …
Lower interest rates to support growth in 2025 GDP growth in the Philippines accelerated slightly in the first quarter of last year, and we expect steady growth in 2025 as interest rate cuts and low inflation help offset the drag from weaker exports and …
Copom hikes again, but tightening cycle near an end (if not already over) Brazil’s central bank hiked the Selic rate by a further 50bp, to 14.75%, today and officials made clear in the accompanying statement that the tightening cycle is near an end. We …
7th May 2025
Fed offers no hint that a rate cut is coming any time soon The minimalist statement issued by the Fed at the conclusion of the FOMC meeting gave no hint that it was considering a further cut to the fed funds rate, at least not any time soon. As was almost …
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 …
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 …
This page has been updated with additional analysis since first publication. Ample spare capacity in the labour market will support disinflation Although New Zealand’s unemployment rate held steady in Q1, the details of today’s jobs report were far from …
Pharmaceuticals imports push trade deficit to new record high The widening in the trade deficit to a new record high in March was driven entirely by imports of pharmaceutical products as firms looked to front-run tariffs. This was broadly in-line with the …
6th May 2025
Tariffs bite, but strong demand elsewhere softens the blow The surprise improvement in Canada’s goods trade balance in March, despite the imposition of US tariffs, was thanks to a surge in exports to other countries. Nonetheless, as the survey indicators …
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. …
