Rising price/wage expectations will prompt the MPC to hike rates aggressively on Thursday It’s almost 50-50 between a 75bps and 100bps hike, but we are going for 100bps Our forecast that rates will peak at 5.00% remains higher than the consensus …
27th October 2022
The Norges Bank signalled in September that it intended to slow the pace of tightening, implying that it would hike by 25bp at the meeting next week. But with inflation data since then again coming in higher than expected, we think the Bank will opt for …
Stubborn core inflation points to fourth consecutive 75bp rate hike But pace of tightening likely to slow as policy becomes more restrictive Recession and falling inflation to prompt rate cuts by the end of next year Fed officials are gearing up for …
26th October 2022
Bank won’t make a U-turn and will opt for another 25bp hike next week But the upside surprise in Q3 inflation points to a higher peak in interest rates With GDP growth slowing sharply next year, we still expect rate cuts from late-2023 While the …
It is a close call but we think a 100bp hike most likely next week. Further rate hikes will follow, bringing the deposit rate to a peak of 3%. But the hawks’ hopes to shrink the balance sheet will go unfulfilled. The ECB is certain to opt for another …
20th October 2022
Board will lift FY2022 inflation forecasts but signal below-target inflation further ahead High inflation is triggering larger pay hikes but that won’t last Even a hawkish successor for Kuroda would struggle to tighten during a global recession The …
Improvement in headline CPI inflation not matched by core Consumers’ near-term inflation expectations continue to rise Not enough evidence yet for the Bank to slow the pace of its tightening Governor Tiff Macklem has told us that the Bank of Canada …
19th October 2022
Bleak global economic backdrop casts a large shadow over the outlook for oil demand Global oil demand has been relatively income inelastic in the recent past We have pencilled in a stagnation in oil demand over the next year In this Energy Watch , we …
OPEC supply cuts from November may not last long OPEC’s latest report shows that the group still expects demand for its crude oil to increase next year. This bolsters our view that the countries cutting supply from November will eventually reverse course …
12th October 2022
OPEC+ may announce a major cut to oil production quotas tomorrow. But with the current quota not being met, the actual hit to oil supply will be much smaller. We estimate that a 1m-barrel-per-day (bpd) cut to quotas would translate into a 350,000 bpd …
4th October 2022
Inflation persistence has strengthened the drive for higher rates… … while weak exchange rates and fiscal policy concerns add to challenges for some. Peaks will be higher than we had assumed and the risk of policy mistakes has grown. Recent developments …
Resilient activity and faster food inflation point to another 50bp hike next week Inflation set to remain stubbornly high We now expect rates to peak at 4.5% by April 2023; first rate cut only by end-2023 With GDP growth holding up and food inflation …
28th September 2022
Early signs that tighter policy is working but RBA will hike by 50bp next week Consensus catching up to our long-held view that rates will reach 3.6% Absence of wage-price spiral means RBA will be able to loosen policy next year Other analysts are …
27th September 2022
Table of Key Forecasts Overview – There has been growing evidence that pipeline price pressures have eased, underlining our view that inflation will fall sharply next year. Commodity prices and shipping costs have fallen, product shortages have …
23rd September 2022
Renewed inflation rise should seal another 50bp hike next week Pace of tightening to slow thereafter Repo rate to rise a little more than the consensus expects by early 202 We expect the MPC to continue frontloading policy tightening with another 50bp …
22nd September 2022
Next week, we expect the Swiss National Bank, Riksbank and Norges Bank to raise interest rates aggressively. The SNB and the Riksbank both look set to raise rates by 75bp, and we would not rule out a bumper 100bp from the latter. But the Norges Bank is …
15th September 2022
Deadline for applications under COVID-19 lending facility won’t be extended Interest rate targets will remain at current levels as surge in inflation won’t be sustained Bank will be able to ride out renewed pressure on 10-year yield target The Bank …
August CPI data guarantee rate hike of at least 75bp next week New projections may show rates peaking slightly higher We still expect eventual sharp fall in inflation to prompt rate cuts next year The continued strength of core inflation points to …
14th September 2022
OPEC expects to have to raise supply in 2023 OPEC’s latest report shows that most producers raised oil output in August, but the gap between targeted production and actual production widened. OPEC also looks optimistic on oil demand to us, which might …
13th September 2022
Another 50 bps hike, a 75 bps increase is not out of the question PM’s fiscal expansion means Bank may have to raise rates further to hit 2% inflation target Rates to peak at 4.00% Although the new Prime Minister, Liz Truss, has saved some of the …
8th September 2022
ECB likely to raise rates by 75bp next week. Further bumper rate hikes to follow even as economy falls into recession. But the hawks’ hopes to shrink the balance sheet will go unfulfilled. There is a case for the ECB to raise rates by 1% next week. …
1st September 2022
GDP growth and inflation lower than the Bank expected But core inflationary pressures still point to 75 bp hike Bank unlikely to give much away about policy beyond September GDP growth and inflation will be lower than the Bank of Canada …
Australia consumers going from strength to strength while inflation remains high Bank to hike rates by 50bp in September before reverting to smaller 25bp hikes Slump in house prices and slowdown in inflation to prompt cuts next year With the …
30th August 2022
Construction activity strong despite weak home sales Home sales fell further below the pre-pandemic norm in July and pre-construction sales seem to have fallen through the floor, but there is no evidence yet that this is weighing on construction. It was …
17th August 2022
More of the same OPEC’s monthly report for August showed that the group continues to produce significantly less than its quota and we expect this trend to continue in the coming months. OPEC is clearly worried about demand due to the economic slowdown, …
11th August 2022
The Norges Bank said in June that it was likely to raise its policy rate by 25bp at its meeting next week, but we now think it is more likely to go for a 50bp hike. Whatever it decides on interest rates, we expect it to signal strongly that further hikes …
Tight labour market and faster inflation point to another 50bp hike next week However, higher interest rates are taking their toll on housing market We expect two more 25bp hikes in October and December, but rate cuts next year Rising interest rates are …
10th August 2022
Banks are frontloading rate hikes to stem inflation risks and avoid more pain later on. Early signs are ok, with inflation expectations down and demand weakening somewhat. But rates could need to fall back before long, especially where housing risks …
4th August 2022
MPC to raise rates by a bigger 50bps and to leave the door open to more 50bps hikes Our forecast that rates will peak at 3.00% remains higher than the consensus forecast of 2.00% Bank takes another step closer to gilt sales We expect the Monetary Policy …
28th July 2022
Drop in inflation unlikely to stave off another 50bp hike next week Another 50bps possible in September, but tightening to slow after inflation peaks in Q3 Repo rate to rise by more than most expect by early 2023 We expect the MPC to continue frontloading …
Labour market surprising to the upside, but inflation in line with expectations Bank to keep hiking by 50bp until October Rates to peak at 3.6%, but housing downturn will prompt rate cuts next year While the labour market has surprised to the upside, …
27th July 2022
With inflation expectations contained, Fed won’t risk abrupt 100bp shock Pace of rate hikes likely to slow once Fed has policy back to neutral stance Fed funds rate to peak at close to 4% early next year and fall below 3% by end-2024 The Fed is set to …
20th July 2022
Housing woes not yet weighing on construction The further decline in home sales in June and the record monthly fall in house prices did little to affect construction activity, with housing starts once again outperforming expectations last month. As there …
19th July 2022
ECB will raise its rates by 25bp and signal 50bp likely in September. Deposit rate will rise to +1.25% by year-end and +2.0% next year. Policymakers may not agree anti-fragmentation tool next week. ECB policymakers are likely to follow through on their …
14th July 2022
Board will lift FY2022 inflation forecast but predict below-target inflation thereafter Interest rate targets will remain unchanged for years However, calm in bond markets provides window for tolerance band widening The Bank of Japan will signal prolonged …
OPEC looking more likely to scrap quotas from September OPEC unveiled its oil market forecasts for 2023 in its monthly report today. OPEC is more bullish than us on demand, forecasting an increase of 2.7m barrels per day. But even though it is also quite …
12th July 2022
Inflation is still rising and labour market still tightening We expect the Bank to hike rates by a further 50bp in July But as the housing downturn weighs on activity, RBNZ will reverse course next year Rising interest rates have started to weigh on house …
7th July 2022
Jump in inflation expectations points to larger 75 bp hike Bank to reiterate need for policy rate to move to a restrictive setting We expect rate to peak at 3.0% in October and now anticipate rate cuts in 2023 The recent acceleration in wage growth and …
6th July 2022
Table of Key Forecasts Overview – While inflation has broadened out and surprised to the upside in 2022 (see Chart 1), we maintain the view that it will fall sharply in the year ahead. For one thing, we expect commodity prices to fall. Even if we are …
28th June 2022
Strength in consumption and labour market points to 50bp hikes in July and August Bank to slow tightening in H2, rates will peak above 3% Housing downturn to prompt rate cuts next year The Reserve Bank of Australia will probably lift the cash rate by …
Having begun its tightening cycle in April, we expect the Riksbank to join the trend by raising its policy interest rate by 50bps, to 0.75%, next week. We were in a minority of forecasters that correctly predicted that the Riksbank would raise the repo …
23rd June 2022
We have raised our interest rate forecasts as banks double down on hawkish stance Alarming inflation picture points to more big hikes in the near term…. … but weakening activity will warrant a slower pace of tightening before long. It’s been a momentous …
22nd June 2022
We expect the Norges Bank to step up the pace of tightening at its policy meeting next Thursday (23 rd June) with a 50bp rate hike, to 1.00%, and to indicate that it will probably raise interest rates again at its “interim” meeting in August. Recall that …
16th June 2022
OPEC still seems optimistic on Russia’s output this year The gap between OPEC-10’s quota and output widened further in May, which adds weight to our view that the group will fail to fully unwind its production cuts by year-end. What’s more, whilst OPEC …
14th June 2022
Inflation to stay above 2% until early next year But BoJ needs broader price increases sustained by stronger wage growth Yield Curve Control looking a lot more secure, but may still be tweaked While Japanese inflation will stay just above the Bank of …
10th June 2022
The SNB will mirror the ECB by keeping its policy settings unchanged once again at its June meeting (Thursday 16 th ). But with a July rate hike by euro-zone policymakers now locked in, the era of policy stasis in Switzerland is drawing to a close, and an …
9th June 2022
The markets and consensus are underestimating the chances of a 50bps rate hike It’s almost 50-50 between a 50bps and 25bps hike, but we’re going for 50bps Either way, recent events support our view that interest rates will rise to 3.00% next year The …
Fed to raise rates to 1.25%-1.50% and signal another 50bp hike in July Stubborn inflation may make September meeting a close call between 25bp or 50bp We expect fed funds target range to peak at 3.25%-3.50% in 2023 H1 The Fed is set to hike interest rates …
8th June 2022
MPC set to follow off-cycle rate hike with 50bps of tightening in both June and August Pace of tightening to slow after inflation peaks in Q3 We will be hosting an online Drop-In after the June MPC meeting, register here We think the MPC will follow its …
2nd June 2022
ECB will leave rates unchanged next week but raise rates by 50bp in July. Bank staff will revise inflation forecasts up , growth forecasts down . ECB to keep us (and itself!) guessing about design of anti-fragmentation tool. Members of the ECB Governing …
1st June 2022
