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Ratio of deaths to births reaches record high According to preliminary data released this week, the number of births in 2024 fell by 5% to a record low of 721,000, while the number of deaths edged up by 1.8% to a record high of 1,62mn. Even though net …
28th February 2025
Underlying inflation picks up Headline inflation rose to 1.9% in January, from 1.8%, despite the partial GST/HST holiday that began in mid-December. (See here .) Excluding taxes, headline inflation climbed to 2.5%, providing a taste of what is to come now …
21st February 2025
Pills, chips and automobiles After last week’s focus on reciprocal tariffs, President Trump shifted his attention this week to product-specific tariffs targeting motor vehicles, semiconductors, and pharmaceuticals. Speaking to reporters on Tuesday, he …
The news on inflation this week was worrying, raising the risk that CPI inflation will remain higher for longer and interest rates will be cut more slowly than we expect and/or not as far. (See here .) Data released this week revealed that wage growth was …
Starts align for further rate hikes A recent Reuters survey showed that most economists expect just one more 25bp rate hike by the Bank of Japan this year. Even so, the financial markets are starting to come around to our view that the Bank will lift …
Risks are tilting towards less easing As most had expected, the Reserve Bank of Australia began its easing cycle with a 25bp cut this Tuesday. However, in her post-meeting press conference Governor Bullock took pains to rein in expectations for further …
Bank of Canada navigating without tariff roadmap The Summary of Deliberations from the Bank of Canada’s January policy meeting confirmed that tariff uncertainty had a hand to play in its decision to cut interest rates by 25bp. In particular, members of …
14th February 2025
January inflation bad, but could have been worse After a hot CPI report this week and a not-so-hot PPI report (at least not in the components that count) we estimate that the Fed’s preferred core PCE price measure increased by 0.28% m/m in January. That’s …
The potential tariffs that UK exporters could soon face for sending goods to the US became bigger this week. On Monday, Trump said that US imports of steel and aluminium from all countries would face tariffs of 25% from 12 th March. Then on Thursday he …
Tax cuts could kickstart the recovery With the New Zealand economy plainly in dire straits , the government is reportedly considering slashing the corporate income tax (CIT) rate in the upcoming May budget. There is certainly a compelling case for the …
10-year JGB yield climbs to 14-year high Even though the 10-year US Treasury yield has been little changed, the 10-year JGB yield rose to a 14-year high of 1.35% this week and we think that it will climb further to 1.75% by year-end. See our Global …
Do not write off tariffs President Donald Trump’s U-turn on 25% tariffs for Canada and Mexico this week, seemingly in exchange for a few trivial concessions from both countries, has reignited speculation he is using the threat of trade barriers as a bluff …
7th February 2025
The announcement and subsequent postponement of tariffs on Canada by President Donald Trump has sprung politicians into action. On Wednesday, Liberal Party leader hopefuls Mark Carney and Chrystia Freeland set out their economic policies. Today, Prime …
The overall message from the Bank of England this week was decidedly dovish, raising the risk that interest rates will be cut further and faster than our forecast of a fall from 4.50% to 3.50% by early 2026. But as we unpacked in our reaction to the …
Pickup in consumption won't nix RBA rate cut Data released this week suggest that the Australian consumer felt rather upbeat last quarter. To start with, we learnt that retail sales held steady in December, a better result than most had anticipated. As a …
Wage growth strongest since 1997 According to the preliminary estimate released this week, labour cash earnings rose by 4.8% y/y in December, the largest increase since 1997. But while those strong gains boost household incomes, on their own they don’t …
Fed in no hurry with tariffs coming soon Underlying economic growth remains solid The 2.3% annualised gain in fourth-quarter GDP came broadly in line with the updated nowcast estimate maintained by our data team. (See here .) Although GDP growth slowed …
31st January 2025
Despite the best efforts of the Canadian government to convince US officials that the border is secure, President Trump reiterated on Thursday that his administration will impose a 25% tariff on imports from Canada this Saturday. That would be a big blow …
The Chancellor’s plans to “kickstart economic growth”, which she set out in a speech this week, probably won’t lift the economy out of its recent malaise in the coming quarters. But at the margin, the announcement of some policies and initiatives aimed at …
BoJ may need to lift inflation forecasts further The economic data released this week support our non-consensus view that the Bank will deliver two more 25bp rate hikes this year. For a start, two out of the three measures of underlying inflation the Bank …
We still expect a shallow easing cycle Over the past few weeks, we’ve been flagging the risk that the Reserve Bank of Australia would loosen policy settings sooner rather than later. With CPI data released this week surprising materially to the downside, …
President Donald Trump’s first week back in office kicked off with a bang. He signed around 100 executive orders and strongly signalled that there were more policy changes to come. The week’s developments give us more confidence in our earlier assumptions …
24th January 2025
An especially ‘Blue Monday’ for Canadians President Trump used his first week (back) in office to double down on threats to impose a 25% tariff on imports from Canada, with the added detail that this could come into effect on February 1 st . As we …
In the first glimpse into how the economy has started the new year, this week’s data took another turn for the worse. First, according to the CBI Industrial Trends Survey (ITS) of the manufacturing sector, in Q1, the optimism, expected activity and …
BoJ signals further tightening As widely anticipated, the Bank of Japan resumed its tightening cycle with a 25bp rate hike to 0.5% at its meeting on Friday. And the Bank’s Outlook report suggests that there’s more to come: the Bank revised up its …
Case for RBNZ to ease aggressively remains intact With data released this week showing that inflation in New Zealand remained subdued last quarter, it’s all but certain that the RBNZ will cut rates by another 50bp, to 3.75%, at its meeting next month. …
The federal government is planning to fight US tariffs with tariffs, but reports this week suggest that those would cover a far smaller value of goods than the US is likely to hit. The government has also failed to muster enough support from the …
17th January 2025
Real economy still firing on all cylinders The strong December employment figures were followed by news this week of solid gains in control group retail sales, industrial production and housing starts. As a result, we now estimate that fourth-quarter GDP …
The Chancellor was able to breathe a sigh of relief this week after favourable CPI inflation prints for December in both the UK (see here ) and the US (see here ) led to a reversal in last week’s leap in gilt yields. In fact, the 28 basis points (bps) …
Bank wary of triggering another market rout A flurry of communication by the Bank of Japan has resulted in the financial markets pricing in an 80% chance of a rate hike at next week’s meeting. We and two-thirds of economists polled by Reuters agree that a …
Upcoming inflation data will be pivotal Data released this week broadly support our view that the Reserve Bank of Australia won’t be in a rush to start cutting rates. Indeed, yesterday’s blockbuster jobs report only adds to the evidence that the …
The power vacuum created by Prime Minister Justin Trudeau’s resignation comes at a bad time, with President-elect Donald Trump ratcheting up his threats against Canada, raising the risk that the next government will be parachuted onto the front lines of a …
10th January 2025
Still waiting for clarity on the Trump agenda More than two months after Donald Trump and the Republicans completed a narrow clean sweep in last November’s election, and with only 10 days until the inauguration, there is still massive uncertainty about …
This week’s leap in gilt yields creates more problems for the Chancellor and is an extra headwind for the economy. But it is not a crisis. Admittedly, it is always worrying when UK bond yields rise by more than yields elsewhere and the pound weakens. …
Tight labour market muddies the waters Financial markets are becoming increasingly optimistic that the RBA’s next easing cycle is right around the corner. They are now pricing in a 70% chance that the Bank will hand down a 25bp cut at its meeting in …
Bank will probably wait until March While the Bank of Japan refrained from hiking interest rates at its December meeting, the case for further policy tightening remains intact. For a start, the “Summary of Opinions” of that meeting showed that at least …
Earlier this week we published our US Outlook . 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 …
20th December 2024
Frosty atmosphere at the top Forty years on from his father famously resigning as Prime Minister following a solo walk through an Ottawa snowstorm, reports suggest Justin Trudeau is mulling the same decision after a tumultuous week within government. The …
A look back at 2024 reveals that some of our forecasts were good and some were off. We were right to forecast this time last year that Bank Rate would be cut only gradually, from the peak of 5.25% to 4.75%. (See here .) That turned out to be closer than …
When matters less than how far Governor Ueda delivered two messages in the press conference after yesterday’s policy meeting : first, the Bank of Japan thinks that policy normalisation is still on track and it intends to raise rates further; second, the …
RBA shake up The week began with Australian Treasurer Jim Chalmers announcing two new picks for the RBA’s monetary policy committee. To recap, in late November, parliament approved an overhaul of the RBA, in line with the recommendations of a review …
Fed presented with early Christmas gift Going into this week, it already looked likely that the Fed would cut its policy rate by 25bp at its December meeting (as opposed to leaving it unchanged), and the muted November price data cemented it. Based on the …
13th December 2024
Bank of Canada signals caution The Bank continued its easing cycle this week with another 50bp cut, taking the policy rate down to 3.25%. While that was widely expected, the hawkish tone of the policy statement prompted investors to pare back expectations …
We’ll be discussing the outlook for Bank of England, ECB and Fed policy in a 20-minute online briefing at 3pm GMT on Thursday 19th December. (Register here .) At the start of this year we thought that GDP growth would gather momentum throughout the year. …
Tight labour market will muddy the waters Although the Reserve Bank of Australia predictably left rates on hold at its meeting on Tuesday, the Board didn’t exactly try to hide the fact that it was in a more dovish mood. Indeed, the Bank stated that it was …
Pick-up in the survey indicators Recent Bank of Canada communications have been keenly attuned to the downside risks to inflation and economic activity, concerns which seemed justified after last week’s disappointing GDP report, which showed third-quarter …
6th December 2024
Cut or skip? This week, Governor Christopher Waller signaled support for continuing the loosening cycle, but noted he could favour a pause this month if “our forecasts of slowing inflation and a moderating but still-solid economy are wrong”. While that …
The government’s new “mission” to deliver “higher living standards…through higher real household disposable income (RHDI) per person and GDP per capita by the end of the parliament” is not ambitious. Real GDP per capita has grown by 1.9% a year on average …
December still on After a news report on Wednesday poured cold water on the prospect of a rate hike at the Bank of Japan’s upcoming meeting in a couple of weeks, the financial markets now price in only a 40% chance of a hike then, down from 60% last week. …
Bank will remain patient Following the release of disappointing Q3 GDP figures this Wednesday, financial markets have started to bring forward their expectations for rate cuts by the Reserve Bank of Australia. (See Chart 1.) They now see a three in four …