Energy shock halts the easing cycle, rate cuts pushed into 2027 Hungary’s central bank (MNB) left its base rate unchanged at 6.25% today, and we think the recent surge in global energy prices has effectively closed the door on the easing cycle for now. …
24th March 2026
In an environment of relatively weak economic growth, alternative sectors stand to benefit from a lower reliance on cyclical drivers, and support from structural trends that will drive long-term demand growth. As a result, we expect alternatives will …
The Iran conflict is more than just another shock to the global economy; it’s a reminder that the long-neglected supply side is becoming an increasingly potent source of macroeconomic instability. Policymakers and investors have focused overwhelmingly on …
This page has been updated with additional analysis since first publication. Economy responding rapidly to higher energy prices March’s flash PMIs show that the conflict in the Middle East is already going a long way to boosting inflation and …
March’s euro-zone PMI survey shows that higher energy costs are weighing on demand and causing input prices to rise rapidly. The drop in the euro-zone’s Composite PMI from 51.9 in February to 50.5 in March left it a touch below the consensus forecast and …
Hit to Japan’s economy from energy shock limited so far The flash PMI for March suggests that the economic hit from the energy shock is limited so far. According to today’s flash estimate, the composite PMI softened from 53.8 to 52.5 in March. It’s worth …
The positive reaction to the latest news on the war provides some guide as to how things might fare if it de-escalates further, and suggests that the damage in some markets might be a bit longer-lasting than in others. After a rough start to the week , …
Government measures artificially subduing headline inflation Inflationary pressures are more entrenched than the weak headline result would for February would suggest. Indeed, we believe that the Bank of Japan’s preferred measure of core inflation will …
23rd March 2026
Iran conflict hitting sentiment The unusually large drop in the EC’s measure of consumer confidence, from a revised -12.3 in February to -16.3 in March, suggests that the Iran conflict is already denting sentiment. A lot will depend on the duration and …
With the global economy potentially facing the largest energy supply shock in history, this Update considers how the oil market may adjust to a new equilibrium in the medium-to-long term. Demand destruction is a permanent or sustained decline in the …
The rise of China has brought both costs and benefits to the euro-zone over the past two decades, but policymakers are increasingly focusing on the costs. We expect the EU to impose more trade defence measures on specific industries in the coming years, …
This year’s spring wage negotiations (Shunto) delivered strong pay hikes for the third consecutive year, which will convince the Bank of Japan to tighten policy further this year. And while softer inflation despite the recent surge in energy prices could …
Escalation in the war remains bad news for asset markets. And while central banks haven’t themselves done much to de-escalate conditions in the bond market, there’s a case, in our view, for an eventual a recovery there. Escalate to de-escalate? Headlines …
All of our coverage on the Middle East conflict can be found here and we have highlighted some key pieces below. As the conflict in the Middle East rumbles on, we’ve adjusted our key macroeconomic forecasts for Sub-Saharan Africa. These can be found in …
20th March 2026
Direct strikes on energy infrastructure in the Middle East this week have unnerved investors, pushing global oil prices higher and prompting sharp reassessments of the expected path for interest rates in most major developed countries. Futures pricing now …
Policymakers fail to rein in calls for rate hikes Over the past week we have learnt that the unemployment rate rebounded to 6.7% in February (and would have risen further if not for a sizeable decline in the labour force), monthly core inflation has now …
Higher oil prices will delay rate cuts The PBOC left loan prime rates on hold today, as was widely forecast. We’d been expecting the central bank to deliver two 10bp cuts to policy rates this year to help support credit growth and combat the deflationary …
The surge in the prices of refined oil products is amplifying the economic impact of the energy crisis. Countries in Africa that ordinarily source oil products from the Middle East have been most directly affected, but the blow-out in oil product margins …
All of our coverage on the Middle East conflict can be found here . Key pieces are below. Are the jumps in rate expectations and gilt yields in the past few days justified? At the end of last week, the markets were pricing in one 25 basis point (bps) hike …
In light of the damage to Qatar’s gas infrastructure and the further increase in energy prices this week, we are revising our euro-zone forecasts. Our new projections are based on the assumption that the price of Brent and TTF peak in the second quarter …
Consumers shielded from price rises so far The conflict in Iran has not so far had any impact on the cost of driving in India. Retail fuel prices are administered by India’s mostly state-owned oil marketing companies (OMCs). Prices of petrol, diesel and …
Pity the poor central banker. As energy prices surge, they are grappling with the trade-off between growth and inflation, while trying to communicate this all to markets without triggering an unwanted tightening in financial conditions. At the end of an …
Looking beyond the short term in the LNG market The attack on Qatar’s LNG export hub grabbed the headlines and has lifted Asia LNG (JKM) and European natural gas prices by 40% and 20%, respectively, from the start of the week. Officials announced that the …
All of our coverage on the Middle East conflict can be found here , but we have highlighted some key pieces below. Brazil an exceptional case Despite the spike in global oil prices, Brazil’s central bank on Wednesday kicked off its easing cycle, albeit …
Slower growth, higher inflation, fewer rate cuts With the crisis in Iran continuing, we have incorporated new assumptions for energy prices into our GDP, inflation and interest rate forecasts for Asia. On our new baseline scenario, Brent crude will …
All of our coverage on the Middle East conflict can be found here , but we have highlighted some key pieces below. Policymakers left in the dark The main message from central bank communications this week is that they are waiting for the fog of war to …
Improved start to the year The 1.1% m/m rise in retail sales in January was worse than expected but, along with February’s advance estimate for another gain, still paints a more positive picture for household spending than late last year. Retail sales …
AI-related spending is giving a significant boost to aggregate demand and GDP growth in some countries. The biggest beneficiaries so far are the US, where the bulk of the spending is occurring, and the major tech exporters including Taiwan. The diffusion …
This page has been updated with additional analysis since first publication. All of our coverage of the macro and market implications of the Middle East conflict can be found here . Fiscal position worse than expected even before energy price shock is …
All of our coverage on the Middle East conflict can be found here , but we have highlighted some key pieces below. Gasoline prices jumped to a record high of ¥ 190/liter at the beginning of the week but the government’s decision to cap them at ¥ …
China’s relative equity and bond market resilience could continue even if the war drags on, although the outlook for the renminbi is less clear. China’s financial markets have been some of the better performers over the war so far, especially among net …
All of our coverage on the Middle East conflict can be found here , but we have highlighted some key pieces below. Higher-for-longer risks are front and centre The Reserve Bank of Australia was the only G10 central bank to raise interest rates this week. …
All of our coverage on the Middle East conflict can be found here , but we have highlighted some key pieces below. The conflict in the Middle East has escalated further over the past week, especially in the last 24 hours. More key members of Iran’s …
19th March 2026
While the conflict in the Middle East could evolve in myriad ways, we think government bonds would typically recover in our ‘baseline’ scenario but struggle in our ‘adverse’ one. That largely reflects what we think would happen to monetary policy. We …
Before ECB policymakers react to the rise in energy prices, they will wait for more clarity on the size and duration of the shock. There would be no need for a response if energy prices dropped back towards pre-war levels fairly soon, but this looks …
The Iran conflict has increased uncertainty and pushed up interest rates, both of which will weigh on investment activity over the next few months. But, assuming the impact of the conflict is short-lived, upward pressure on property yields will be …
Sharp fall in new home sales a weather-related blip The large drop in new home sales in January reflects the impact of extreme cold weather across much of the country, and is likely to have reversed last month. Moreover, newbuild sales are less vulnerable …
While leaving interest rates at 3.75% today as widely expected, the Bank of England suggested it is more concerned about the upsides to inflation from the leap in energy prices triggered by the conflict in the Middle East than the downsides to activity. …
Chance of ECB hiking in April is rising The ECB’s press release and updated forecasts suggest that policymakers think that the inflationary effects of higher energy prices will outweigh the disinflationary effects of weaker economic growth. While they are …
Sustained high oil prices would stall the nascent manufacturing recovery by weighing on global demand. The data centre buildout would likely go on unaffected, however, sustaining strong demand for hi-tech manufactured goods, with an increasing share met …
BoE ready to react, and seems a bit more concerned about inflation than activity While leaving interest rates at 3.75% today as widely expected, the Bank of England played the current uncertain outlook for energy prices with a fairly straight bat by not …
The comparative affordability of renting versus owner-occupation is one factor that we expect to support rental demand across most European markets in the coming years, especially in the German markets and Vienna where the cost gap is highest. In our UK …
SNB leaves rates unchanged, stresses uncertainty The SNB left its policy rate unchanged at zero today and nudged up its inflation forecast trivially. Otherwise, its commentary underlines the Bank’s willingness to intervene to limit upward pressure on the …
CBC to stay on the sidelines Taiwan’s central bank (CBC) left its main policy rate on hold today (at 2.00%) and, with growth likely to hold up well in the face of the conflict in the Middle East and the government limiting the pass through from higher …
This page has been updated with additional analysis since first publication. Jobs growth stabilising, but labour market still weak before stagflation shock While there were some green shoots of a recovery in payroll employment in February, today’s data …
A slim majority of BoJ Board members believe that the conflict in the Middle East will on balance strengthen inflationary pressures in Japan. Accordingly, we’re sticking to our forecast that the Bank will deliver another 25bp rate hike at its April …
