Filtered by Topic: Monetary Policy Use setting Monetary Policy
Overview – Our working assumption is that the 90-day pause on the Trump administration’s reciprocal tariffs will be made permanent, with tariffs remaining at 10% for most countries apart from China. Providing Congress soon recycles the tariff revenue into …
16th April 2025
Overview – We’ve become more concerned about the outlook for the economy due to the drags from higher businesses taxes and the more uncertain global backdrop being bigger than we thought and the boost from government spending being smaller. Our forecasts …
31st March 2025
Overview – Economies across Sub-Saharan Africa are amongst the least affected EMs by the protectionist shift that the US is embracing. And growth in the region is set for a modest pick-up on the back of lower inflation and easing monetary policy. But …
28th March 2025
Overview – We’ve raised our GDP growth forecasts across most of the region for this year and think that Central and Eastern European (CEE) economies will pick up pace going into 2026, despite the headwind from US tariffs. An end to the war in Ukraine …
27th March 2025
Table of Key Forecasts Global Overview – We expect the world economy to grow a touch slower in the next couple of years than it did in 2024. Trump’s policies will drag on US growth, policy support will not prevent a slowdown in China’s economy, and looser …
Following the series of US tariff announcements in early April, we have revised our forecasts. You can find the updated forecasts here . Overview – We have raised our assumption for the average US tariff rate that Canadian exporters will face, to a level …
Overview – GDP growth in the Middle East and North Africa will pick up over the next couple of years supported by rising oil and LNG output from the Gulf. However, lower oil prices will result in tighter fiscal policy in parts of the Gulf, particularly …
Table of Key Forecasts Overview – EM GDP growth picked up towards the end of last year, but the outlook is increasingly challenging – and not just because of US import tariffs. Weaker capital inflows, lower commodity prices and tight policy will all drag …
26th March 2025
Overview – Increased US tariffs will exacerbate a broader slowdown in exports. China’s economy will also face continued drags from the property downturn and wider deflationary dynamics. A sizeable fiscal loosening will provide a partial offset but won’t …
Overview – We expect economic growth across the region to remain subdued, with most economies set to record below-trend and below-consensus growth this year. While lower interest rates will provide some support to growth, this boost is likely to be offset …
25th March 2025
Overview – Both Antipodean economies seem to have turned a corner at the end of last year, and we expect the recoveries to gather momentum in the coming quarters. Given the tight labour market and elevated public demand, we believe the RBA will only …
Overview – The euro-zone will get a boost from Germany’s decision to ditch its fiscal rules and ramp up defence spending, as well as the relaxation of the EU’s budget rules. But governments other than Germany won’t loosen policy very much, and the …
21st March 2025
Overview – Mexico is one of the most vulnerable countries to US import tariffs and, at best, the economy will just about eke out positive growth this year. More sweeping tariffs than we have embedded in our forecasts could easily tip the economy into …
20th March 2025
While trade tensions create downside risks, we expect GDP growth to be around trend this year. And following another strong showing in this year’s spring wage negotiations, wage growth will remain high enough to keep inflation above the Bank of Japan’s 2% …
17th March 2025
Overview – India’s economy is emerging from its recent soft patch. Headline CPI inflation should remain close to the RBI’s 4% target over the coming months, enabling the central bank to continue easing monetary policy. We’re expecting a further 75bps of …
11th March 2025
President Trump’s trade and other policies might cause turbulence over the next few years, but they are unlikely to derail the megatrends which will shape the global economy in the long run. We still expect AI to drive a revival in productivity growth …
25th February 2025
Overview – We expect the incoming Trump administration’s policies to have a mildly stagflationary impact on the economy. Assuming that Trump introduces tariffs and immigration curbs via executive action by the middle of next year, we would expect GDP …
19th December 2024
Tab le of Key Forecasts Overview – Headwinds to growth will remain strong in 2025 and our forecasts lie below the consensus. While more protectionist US trade policy will hit China and Mexico, the impact for most is likely to be limited. Currencies will …
Table of Key Forecasts Global Overview – We expect 2025 to be another year of reasonably healthy global GDP growth and a continued normalisation of monetary policy. To the extent that tariffs hurt the global economy, the damage will be less than …
Overview – The near-term economic outlook has brightened, with lower interest rates feeding through and consumption benefitting from the recent strong pace of real income growth. That should help to drive quarterly GDP growth above 2% annualised in the …
18th December 2024
Overview – Slowing growth across Emerging Europe in recent quarters has set a downbeat tone heading into 2025. With domestic and external headwinds remaining strong, we think that most economies in the region will disappoint consensus expectations for …
17th December 2024
Overview – Falling inflation and looser monetary policy will help GDP growth to accelerate across Sub-Saharan Africa next year. A shift towards trade protectionism in the US will hurt certain sectors in certain countries, but is unlikely to have a …
Overview – China’s leadership has signalled that policy will be loosened further, which will provide a near-term prop to activity. But we still expect China’s growth to slow next year, because of the more challenging external environment and a further …
Overview – We expect economic growth in the euro-zone to remain sluggish. This is partly due to adverse demographics and structural forces hampering the competitiveness of industry. But past monetary tightening will continue to weigh on investment and …
16th December 2024
Overview – We expect another year of below-trend and below-consensus GDP growth in most of Asia in 2025, as tight fiscal policy and weak exports weigh on output. In China, a slowdown in construction will act as a further drag. Inflation is back to (or …
13th December 2024
Overview – Tight policy, deteriorating terms of trade and, in Mexico’s case, US trade protectionism will keep GDP growth in Latin America weak and below consensus expectations in the coming years. Fiscal risks will remain in the spotlight as governments …
12th December 2024
Overview – Although their recent performance leaves much to be desired, we believe that both Antipodean economies are on the cusp of a cyclical upswing. But while the RBNZ has ample room to support the recovery without stoking inflation risks, the same …
Overview – GDP growth in the Middle East and North Africa will accelerate in 2025 on the back of higher oil production in the Gulf. The UAE will be the Gulf’s top performing economy and, elsewhere, we expect that growth in Egypt and Morocco will …
11th December 2024
This publication has been updated to reflect changes to our forecasts after the October GDP release on 13th December 2024. Overview – Despite the deterioration in the outlook for the UK's key trading partners, we remain optimistic that UK GDP growth will …
10th December 2024
Overview – After a stellar run, India’s economy has entered a softer patch that will continue for a few more quarters. We think that will portend an underperformance in local equities relative to other major benchmarks. Headline CPI inflation is likely …
Overview – We are not expecting the planned fiscal policies of the government to derail the economy – we expect GDP to grow by 1.0% this year and by a decent 1.5% in both 2025 and 2026. Instead, the main influence of the government’s plans to raise public …
1st October 2024
Overview – A pivot towards fiscal and monetary stimulus should support China’s growth in the near-term. But the economy continues to be propped up by investment, still elevated levels of construction, and the willingness of trading partners to allow …
27th September 2024
Table of Key Forecasts Global Overview – The global economy has hit a soft patch with the euro-zone virtually stagnant, the US labour market flagging and China rationing its policy stimulus. We expect this weakness to persist around the turn of the year …
26th September 2024
Overview – With the inflation battle all but won, weak GDP growth will force the Bank of Canada into more aggressive action, with a couple of 50bp interest rate cuts to end this year. We expect the Bank to adopt a more measured pace of loosening in 2025, …
25th September 2024
Table of Key Forecasts Overview – Aggregate EM growth is entering a softer patch, despite the tailwind from the Fed’s easing cycle. Growth concerns will prompt central banks in much of Asia to cut interest rates. But stubborn inflation pressures elsewhere …
Overview – A combination of falling inflation and looser monetary policy should help growth to accelerate across Sub-Saharan Africa from early next year. But tight fiscal policy will constrain the recovery and our growth forecasts sit below the consensus. …
Overview – A tight labour market and elevated public demand will keep the RBA from loosening policy before early-2025. Moreover, we expect the forthcoming easing cycle to be short-lived by past standards. By contrast, the more pressing need to stem the …
Overview – With inflation normalising due to improving supply, the Fed is in the fortuitous position of being able to lower interest rates even though economic growth remains solid and the unemployment rate is still relatively low. Despite the downshift …
23rd September 2024
Overview – Tight policy and deteriorating terms of trade will keep growth across Latin America subdued and we think that the region will underperform other parts of the emerging world – as well as consensus expectations – over the next couple of years. …
19th September 2024
Overview – Headline GDP growth in the Gulf economies will strengthen sharply in 2025 as oil output cuts are unwound. But lower oil prices will prompt a turn to fiscal consolidation in most of the Gulf, causing growth in non-oil sectors to slow. Elsewhere, …
Note: This Outlook was originally published on 17th September . It was updated on 1st October to reflect a revision to our ECB interest rate view . Overview – The euro-zone appears to have lost some momentum and is likely to remain sluggish in the coming …
18th September 2024
Overview – The economy is cooling but remains primed to grow by 6-6.5% per year between 2024 and 2026, which would put India on course to become the world’s third-largest economy in the next couple of years. Headline CPI inflation is likely to remain …
Overview – We have generally revised down our growth forecasts for this year and next. Weakness in the euro-zone will remain a drag on export sectors across Central and Eastern Europe (CEE) in the coming quarters, while tight policy will take some heat …
17th September 2024
Overview – The economy is on the mend and underlying inflation seems to be levelling off around the Bank of Japan’s 2% target. Accordingly, we still expect a final rate hike in October. But as inflation falls below target next year and the spring wage …
5th September 2024
We still think that a fading in services inflation and below-target CPI inflation will prompt the Bank of England to cut interest rates from 5.25% now to 3.00% by the end of 2025, rather than to 4.00% as investors anticipate. That explains why we think …
31st July 2024
Table of Key Forecasts Global Overview – The global economy seems to be heading into recovery mode as the adverse effects of the previous surge in inflation subside. Real incomes are recovering in most advanced economies and China is feeling the benefits …
27th June 2024
The Emerging Markets Economic Outlook contains analysis and forecasts for the seven emerging regions we cover: China, India, other Emerging Asia, Latin America, Emerging Europe, the Middle East & North Africa and Sub-Saharan Africa. It also contains …
Overview – Growth in Sub-Saharan Africa is set to accelerate over the next couple of years, helped by a more favourable external environment as well as falling inflation and interest rates. But tight fiscal policy will constrain the recovery and our …
Overview – Below potential GDP growth and falling core inflation will persuade the Bank of Canada to cut interest rates further, with the policy rate settling at 2.5% next year. Lower interest rates should, in turn, drive a recovery in GDP growth from …
26th June 2024
Overview – Activity has slowed to a standstill in both countries. Although output growth should gather momentum going forward, it will remain below its pre-pandemic average. However, with underlying inflation still running well above target, central banks …
