Copom & BCCh: hawks & doves This week's rate decisions in Chile and Brazil showed a stark contrast in messaging. While Chile’s central bank (BCCh) left its policy rate unchanged at 5.00%, its communications were relatively dovish. It sounded less …
20th June 2025
Risk of further escalation continues to mount The continued Israel-Iran military strikes are likely to have a limited direct impact on Israel’s economy – so long as the conflict remains confined to a matter of weeks. But the risk of escalation is high, …
Europe is taking Trump’s side on China When President Trump returned to office, his aggressive treatment of traditional allies raised the possibility that the EU and China would come together in defence of free trade. But the opposite is happening: US …
At our in-person Roundtables in London on Tuesday 1st July, clients can discuss with our economists and their peers how the government has influenced the economy in its first year in office. (Register here .) Upside risk to inflation from Middle East …
Given the further escalation of the Israel-Iran conflict in the past few days, this Weekly considers its possible implications for euro-zone inflation and monetary policy. These will depend mainly on how the conflict will affect energy prices , which we …
Mapping out conflict scenarios Much of the focus this week has understandably been on oil markets. Oil prices continued to climb as the Israel-Iran conflict escalated, reaching $76pb from $73 at the start of the week. In particular, the potential for US …
Growth boost for Korea More policy support in Korea looks to be on its way soon. According to the minutes of the Bank of Korea’s May meeting (when rates were cut a further 25bps) which were released earlier this week, Board members were united on the need …
Front-running fades but exports to US still strong We learnt this week that the goods trade deficit narrowed in May to c.$22bn, from c.$26bn in April. The breakdown shows that the front-running of exports to the US - evident prior to President Trump’s …
Downside risks persist in Australia Australian employment unexpectedly fell by 2,500 last month, as a 38,700 rise in full-time employment was more than offset by a 41,200 fall in part-time employment. However, with the unemployment rate holding steady at …
Case for tighter monetary policy remains strong The Bank of Japan tweaked its bond purchases at this week’s meeting but retained the dovish tone adopted at its May meeting. Indeed, the minutes of the May meeting showed that Board members were worried …
Israel and Iran have traded strikes over the past week and while there are a large number of ways the conflict could go from here, the risk of further escalation is mounting. Not only would this cause enormous damage to Iran’s economy, but spillovers to …
19th June 2025
The dollar has recovered some of the ground it lost earlier in the week in the wake of Israel’s overnight strikes on Iran. While that still leaves the greenback near its lowest level in more than three years, and close to breaking below the bottom of its …
13th June 2025
Prime Minister Mark Carney announced on Monday that the Department of National Defence would receive an additional $9.2bn (0.4% of GDP) this fiscal year, raising total defence spending to NATO’s 2% of GDP target. This is five years ahead of the timeframe …
What inflation? The impacts of tariffs were notably limited in May’s CPI and PPI data. Major appliance prices rose by 4.3% m/m, similar to the increase experienced when Trump imposed tariffs on washing machines during his first term. Meanwhile, the price …
China senses an opportunity as the US disengages China’s pledge to provide tariff-free access to imports from Africa is a clear effort to strengthen ties as the US disengages from the region, and also appears to be a concessions to African leaders …
Mexico’s exports holding up well … so far Figures out this week provided further evidence that Mexico's exports have been relatively resilient in the face of US import tariffs. Auto exports (compiled by local trade body AMIA) were down 3% y/y in May …
The Israeli air strikes on Iran overnight have renewed fears of a widening of conflict in the Middle East. We covered the implications for the oil market and the global economy in a report here , and discussed the latest developments in a Drop-in …
We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20 minute online Drop-In at 3pm BST on Thursday 19th June. (Register here .) If the Chancellor, Rachel Reeves, was hoping that at the end of the week of her Spending Review we’d …
OPEC+ watches on closely Israeli strikes on Iran and fears over the potential nature of Iranian retaliation sent Brent crude prices from ~$67pb to a peak of $78pb this week. While prices have since fallen back to $75pb at the time of writing, they are …
Short-term gain, long-term pain April’s data suggest that the boost to the euro-zone economy from exporters front-running US tariffs came to an end at the start of the second quarter. Euro-zone industrial production and exports were very strong in Q1 as …
BoJ’s pause won’t last as long as most expect The main show in town next week will be the Bank of Japan’s meeting on Tuesday. As we explain in our BoJ Watch , the Board will almost certainly leave its policy rate unchanged, given its concerns about the …
Beijing continues to prioritise investment The State Council released another policy document this week promising to “further guarantee and improve people’s livelihoods.” But this latest pledge to support households is once again empty. The government has …
Downside risks growing There are growing signs that economic conditions in Australia have continued to weaken. According to a new NAB business survey, business conditions fell to their lowest point since August 2020 last month. On past form, the data are …
Price pressures continue to ease across Asia Inflation data published over the past week or so shows that price pressures across the region remained weak in May. (See Chart 1.) Thailand, Sri Lanka and China are in deflation, while the headline rate is …
Our Q3 India Outlook This week we published our Q3 India Economic Outlook , which contains all of our latest analysis of India’s economy and financial markets. The forecasts and underlying data can also be viewed in our interactive India Macro Dashboard …
Fresh Israel-Iran strike worries rattle oil markets Reports have surfaced that Israel is planning an imminent strike on Iran and/or its proxies in Iraq, prompting oil prices to jump over the past 24 hours. But there are reasons to think that any fallout …
12th June 2025
Tariffs and budget to cancel each other out The latest CBO estimates released this week show that the budget reconciliation will cause the deficit to rise to over 7% of GDP by 2028. Although the deficit is expected to narrow again from 2029, as spending …
6th June 2025
Nigeria floods: worse to come? The flooding Nigeria has faced in recent weeks has claimed scores of lives and, while the economic hit should be limited, the country’s vulnerability to further climate challenges is worryingly high. We should first note the …
The US dollar is enjoying a strong end to the week thanks to signs of economic resilience in the latest US Employment Report but, for the second week in a row, the DXY Index is little changed on net. Such small consecutive weekly moves (up by ~0.2% last …
Government officials confirmed this week that talks are ongoing between Canada and the US over a new trade and security deal after the two countries’ leaders met in Washington last month. While little has been given in the way of a timeline, there is …
The European Commission gave its approval for Bulgaria join the euro-zone this week, which clears the way for the country to adopt the euro on 1 st January 2026. Bulgaria’s accession had been delayed over the past couple of years in large part due to …
Colombia: will the government deliver? The Colombian government’s fiscal plans due to be published next Friday will receive particular attention (and scrutiny) given the country’s increasingly fragile public finances – the latest monthly figures show that …
Fiscal policy back in focus With confidence-sapping fiscal “black holes” and rises in business taxes dominating much of her first year in office, the Chancellor, Rachel Reeves, will finally get to splash the cash by announcing a series of infrastructure …
Wage growth looks less worrisome The slump in earnings growth at the start of the year looks increasingly like a data glitch . Earnings data published yesterday incorporated upward revisions for March and showed a marked rebound in April. (See Chart 1.) …
Rapid economic growth ≠ equity outperformance Data released this week suggest the economy has carried its recent momentum into Q2. Although May’s composite PMI output balance fell slightly, it remained firmly in expansionary territory. (See Chart 1.) This …
OPEC+ frictions will take center stage from here The latest announcement from OPEC+ that it will continue to add oil to the market in July at a faster pace than it had planned a few months prior solidified a marked shift in the group’s output policy. …
Tariff scenarios compared Along with its slightly hawkish communications, which we commented on here , the ECB published estimates this week of how US tariffs could affect the economy. In short, they think tariffs of 10% or more would reduce GDP …
Xi finally talks to Trump Yesterday’s phone call between the Chinese and American heads of state reduces the immediate risk that the Geneva truce breaks apart but doesn’t make a more permanent reduction in tensions more likely. Based on what the two sides …
We are hosting an online briefing to discuss the outlook for India’s economy and financial markets. Sign up here . Korea: economy key challenge for President Lee One of the key challenges facing Korea’s newly-elected president, Lee Jae-myung of the …
Lingering inflation risks complicate matters There is no sugarcoating the fact that Australia’s economic recovery is struggling to take off. National accounts data released this week showed that real GDP grew by just 0.2% q/q in Q1, well below the 0.45% …
Saudi in the driving seat of OPEC+ aggressive shift OPEC+ this week agreed to another 411,000bpd hike to oil output for July and there’s little reason to think that the cartel’s leader, Saudi Arabia, will reverse course on oil policy anytime soon. After …
5th June 2025
The dollar has stabilised overall this week amid continued uncertainty around US trade policy and questions around the fiscal package that is still working its way through Congress. Market participants appear increasingly to be looking through the latest …
30th May 2025
Court rulings leave trade policy in disarray Although this week’s court ruling – that President Trump doesn’t have the “unbounded authority” to impose universal tariffs on other countries – has been temporarily stayed, there is a fair chance that even …
We have consistently argued that the influence of Trump’s tariffs on the UK economy would be modest. As a result, the impact on UK GDP of the eventual outcome of the US court ruling on the legality of the 10% universal tariff will probably also be small. …
A very brief reprieve The ruling by the US Court of International Trade this week (see here ), albeit quickly put on hold, raises the possibility that the US’ 25% fentanyl-related tariffs on non-USMCA compliant imports from Canada will soon be a thing of …
Tinubu’s two-year anniversary in power It’s two years since Bola Tinubu became president of Nigeria and with support waning, he’s announced ambitious spending plans funded by foreign loans. But with borrowing costs high, we suspect these plans won’t …
Higher GDP forecasts for 2025 and 2026 Data released today confirmed that the economy got off to a strong start in 2025 – GDP growth rose to 7.4% y/y, from 6.4% y/y in Q4 2024 (revised up from 6.2%). (See here for our Data Response .) Looking ahead, it’s …
A turning point for Mexico’s judiciary Mexicans head to the polls on Sunday to elect almost 900 federal judicial positions and thousands of positions at the local level. Roughly the same number of posts will be up for grabs in 2027. This huge …
The polls ahead of the second-round run off of Poland’s presidential election on Sunday point to a very tight race, with the two remaining candidates sharing virtually equal levels of support. The president of Poland has little direct input into domestic …
The latest twists and turns in the US tariff saga once again dominated the week. We responded to the court ruling that suspended Trump’s tariffs here . The news that tariffs have now been reinstated doesn’t alter our main conclusions. The latest legal …
