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For our more detailed analysis of the Bank's December policy announcement, see here . Dovish hold supports our view that rates will be cut further and faster than market pricing While the Bank of England left interest rates at 4.75% today, it struck a …
19th December 2024
The fiscal loosening announced in October’s Budget means inflation and gilt yields are now set to be higher than previously expected over the next few years. That will limit yield compression, and the commercial property recovery will therefore be weak by …
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 …
The Riksbank’s decision to cut its policy rate by 25bp to 2.5% was widely anticipated and we expect it to cut just one last time next year, by 25bp in March. In contrast, Norges Bank left its policy rate unchanged today at 4.5% and is unlikely to start …
Riksbank slows pace of cuts, likely to pause loosening at next meeting The Riksbank cut its policy rate by just 25bp today to 2.5% and it is unlikely to cut at its next meeting in January. Further ahead, we now expect just one more 25bp cut next year, in …
UK equities have kept up with other non-US ones in recent months despite a string of weak domestic activity data and stubborn inflation pressure. We think they will outperform most non-US markets in 2025, with the FTSE 100 hitting 9,000 by end-2025. The …
18th December 2024
The incoming Trump administration is threatening to put new tariffs on European exports. In our view, given their limited macroeconomic impact, they will not be a game-changer for commercial property. But in some sectors, notably industrial and, within …
Underlying inflation remains high but is on a downward trend and we expect it to fall much further next year. This should prompt the ECB to cut interest rates a bit further than investors anticipate. Data published this morning revealed that euro-zone …
This page has been updated with additional analysis since first publication. Further rebound rules out an early Christmas present from the BoE Coming on the back of the stronger-than-expected rise in wage growth in yesterday’s release, the further …
The sharp rise in transactions in October and the acceleration in house price growth in November suggest some relief rally or pent-up demand after the Budget is more than offsetting the recent rises in mortgage rates. In any case, if we’re right that Bank …
17th December 2024
We think corporate credit spreads in the euro-zone will widen only slightly next year, despite dim economic prospects. Corporate credit spreads, as captured by the option-adjusted spreads (OAS) of ICE BofA Corporate Investment grade (IG) and High Yield …
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 …
Rates on hold, new MNB Governor will have little scope to cut in 2025 The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think that a rise in inflation in early 2025 will keep rates on hold until at least the new …
This page has been updated with additional analysis since first publication. German economy set to remain weak The Ifo Business Climate Index (BCI) remained deep in recessionary territory in December. While the survey has overstated the weakness in the …
This page has been updated with additional analysis since first publication. Rebound in wage growth will add to BoE’s inflation concerns The big rise in regular private sector pay growth in October will increase the Bank of England’s concerns about a …
While equities in Germany have managed to ride out weak growth and political uncertainty this year, those in France have not. We suspect that they will all fare poorly next year, as those adverse conditions remain and a trade war takes a toll. Today …
16th December 2024
EM GDP growth picked up in the second half of the year but faces headwinds in 2025 from tight policy at home and challenges abroad. Our growth forecasts generally sit below the consensus. Monetary easing will continue but, outside Asia, high inflation …
Earlier this month, we published our key macro and market themes for 2025. It has also become tradition at this time of year to publish a list of key risks to watch for in the coming 12 months. This can be a fool’s errand: too often, these descend into a …
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 …
This page has been updated with additional analysis since first publication. PMIs raise concerns over the prospect of stagflation Despite the composite PMI staying at 50.5 in December, at face value it’s consistent with the 0.1% q/q rise in real GDP in Q3 …
This page has been updated with additional analysis since first publication. PMIs strengthen the case for looser monetary policy December’s PMI survey for the euro-zone suggests that the economy is contracting and that price pressures remain largely under …
Winner and losers from Assad’s downfall The fall of Syria’s President Bashar al-Assad last weekend is a monumental development after a period of 54 years in which his family had ruled the country. While there is still a high level of uncertainty over the …
13th December 2024
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. …
Overview – Most energy and industrial metals prices will fall in 2025 as structural headwinds to demand build and supply rises. Geopolitical developments remain a key uncertainty and it is easy to think of developments in the Middle East that could push …
Mood at the ECB shifting gradually In our view, this week’s ECB meeting didn’t spring any surprises, and the message was clear that we should expect further interest rate cuts. (See here .) Yet the market reaction during and after the press conference …
This page has been updated with additional analysis since first publication. October worse than it looks, long-term outlook bleak October’s euro-zone industrial production data look much worse without Ireland, where the data are notoriously volatile. The …
This page has been updated with additional analysis since first publication. Economy at risk of contracting, partly due to the Budget The 0.1% m/m fall in GDP in October is the second such decline in a row and means there is every chance that the economy …
Given our dovish view of ECB policy, we expect German Bund yields to fall back in 2025, and to diverge further from US Treasury yields. Unlike the Bank of Canada (BoC) and the Swiss National Bank (SNB), the European Central Bank (ECB) cut its policy rates …
12th December 2024
Risks to Russia’s macroeconomic stability are mounting on the back of the recent credit boom and sharp rise in interest rates. Our EM financial risk indicators show that Russia is now at high risk of a banking crisis. We don’t expect these risks to …
Next Thursday, we expect the Riksbank to reduce its policy rate from 2.75% to 2.5% as it closes in on the end of its loosening cycle. In contrast, we think Norges Bank will leave its policy rate unchanged again next week at 4.5% as it waits until early …
Deterioration in global outlook has increased the downside risks to UK GDP growth… …but Trump’s election win and the UK Budget have boosted the upside risks to UK inflation MPC to keep rates at 4.75% in December and to continue to cut by 25 basis points …
Today’s ECB policy statement and press conference suggest that policymakers are increasingly confident of meeting their inflation goal and increasingly conscious of downside risks to the economy. We think the outlook is weaker than the Bank believes and …
To see how our latest European property forecasts stack up against the other regions we cover and against other asset classes, please see our new Global Returns Dashboard here . Overview – The recovery in property values is underway. But we think it will …
ECB likely to accelerate policy easing next year While the ECB’s decision to cut its deposit rate by 25bp was widely expected, the accompanying statement suggests that policymakers are less concerned than previously about upside risks to inflation and …
Bumper SNB rate cut, further to come This morning’s 50bp rate cut by the SNB, which brought the policy rate to 0.5%, came as a surprise to most economists. That said, it was balanced by a revised policy statement which implies that policymakers think this …
Housing market resilient to higher mortgage rates November’s RICS survey provides further evidence that housing activity and prices remained resilient to the rise in mortgage rates in November. And our view that mortgage rates will start to fall again …
With pressures on public spending continuing to grow, this has raised the chances that the Chancellor, Rachel Reeves, raises spending further in her 2025 Spending Review. If she raises spending and funds it with higher taxes, that would probably add to …
11th December 2024
Surging inflation will force another large rate hike The renewed acceleration in Russian inflation to 8.9% y/y in November, and likelihood of further increases in the coming months, argue strongly in favour of another large interest rate hike from the …
Our forecast that commercial real estate is set for a modest recovery is dependent on our view that a decline in gilt yields will help stabilise property yields. But if interest rates don’t fall back the outlook for returns could be a lot more …
The price of natural gas in Europe was thrust into the spotlight during Europe’s energy crisis and remains a key political and industrial pressure point. In short, we expect natural gas prices in the EU to halve over the coming years as global LNG …
10th December 2024
Our new Bank of England Caseometer helps track whether the Bank is becoming more inclined to cut interest rates faster and further or slower and not as far. Our forecast is that rates will continue to be cut gradually, but that they will fall to 3.50% in …
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 …
A vast share of our clients highlighted geopolitics and/or Trump as their biggest blind spots going into 2025 when polled at our recent London roundtables. Meanwhile, a large majority thought that interest rates will be the key driver of returns next …
9th December 2024
When Europe features prominently in client questions it is not normally a good sign. The past few days have been no exception. The immediate concern is France, where the government of Michel Barnier was toppled last week after failed efforts to push …
Another twist in Romania’s election rollercoaster Romania’s constitutional court unexpectedly announced today that it will annul the first round of the presidential election , which took place on 24 th November and saw independent far-right candidate, C …
6th December 2024
GDP growth picked up in Q3 but timelier data suggest that it has slowed in Q4. We expect growth to remain sluggish next year regardless of whether President Trump raises tariffs on imports from Europe. We also think that inflation will be below 2% in …
The end of Michel Barnier’s administration after just three months on Wednesday was something of an anticlimax for bond markets as it had already been discounted by investors. Spreads on French bonds have actually narrowed this week. There remains a lot …
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 …
