Inflation jump likely to prompt shift to tightening The stronger-than-expected South African inflation reading for April (both headline and core) probably tips the balance towards the Reserve Bank (SARB) opting for a 25bp interest rate hike (to 7.00%) at …
20th May 2026
The RBNZ is likely to leave rates on hold at its meeting next Wednesday, while stressing that it stands prepared to tighten policy if inflationary pressures show signs of persistence. In our baseline scenario, we expect the Bank to wait until Q4 to hike …
Rupiah falls prompt 50bp hike, but respite for the currency could be fleeting Bank Indonesia’s decision to lift its policy rate by a larger-than-expected 50bp, to 5.25%, shows that officials have shifted their attention away from the need to support …
This page has been updated with additional analysis since first publication. The lull before the storm The drop in CPI inflation from 3.3% in March to 2.8% in April (consensus and CE forecast 3.0%) feels like the lull before the storm and tells us very …
The fact that Asian buyers of LNG from the Middle East have so far curtailed demand has helped to limit the upward pressure on natural gas prices. But even if the Strait of Hormuz reopens soon, a seasonal pick-up in demand means that benchmark prices in …
19th May 2026
With the pain in global government bond markets intensifying over recent days and equity markets starting to wobble too, the so-called “Trump put” may soon come into play again. But, judging by the post-“Liberation Day” episode last spring, market …
The Gulf economies are set for their steepest contraction since the early 1980s this year. The closure of the Strait of Hormuz has led to sharp falls in hydrocarbon production, even in those countries able to divert some of their exports via pipelines. …
The front-running of US tariffs gave a small boost to euro-zone exports and GDP last year. But now that the dust is settling, euro-zone exports to the US are significantly lower than they were before the tariffs increased. This decline is equivalent to …
The long-term demographic drivers of care home demand are well-rehearsed, but there is likely to be a degree of offset from factors that will keep more seniors living at home for longer. Nevertheless, the sector looks set for significant growth, headed by …
Muted core price growth reduces the pressure on the Bank The muted pace of core price growth in April likely reflects the softness of the labour market and consumer demand. That, in turn, reduces the pressure on the Bank of Canada to follow through with …
The EM central banks that have tightened monetary conditions in response to the energy shock (Turkey, Pakistan, Philippines) are facing balance of payments strains and very large inflation shocks. Beyond those countries, we think Colombia, South Africa, …
This page has been updated with additional analysis since first publication. Sharp weakening in employment points to short-lived burst in inflation The sharp weakening in the labour market in April may help to restrain the recent upward march in gilt …
RBA will hike to 4.60% in Q3 Given the RBA’s ongoing concerns about inflation expectations becoming unanchored, we think it will tighten policy a bit further still. The minutes of the RBA’s May meeting confirmed that the Board considered the option of …
GDP growth will grind to a halt this quarter Japan’s economy approached the Iran war with solid momentum but we think that GDP growth will grind to a halt this quarter and next. The 0.5% q/q rise in Q1 GDP was a touch stronger than the analyst consensus …
The risk of a substantial rise in oil prices increases with every day that the Strait of Hormuz remains closed. For Asia’s energy-exposed economies, this presents a growing challenge as inflation rises, currencies weaken and external positions come under …
18th May 2026
The latest RICS survey showed that the Iran war has dampened both occupier and investor sentiment, with the latter seeing a larger fall. Rental expectations held up though, which implies the fall in capital value expectations is due to an expected rise in …
The Q1 RICS survey painted a downbeat picture of sentiment in European commercial property markets, with France and Germany generally weighing on the overall picture and Spain, Portugal and Poland looking rosier. Looking ahead, tightening credit …
The expansion of Nigeria’s domestic refining capacity has helped to boost the current account surplus and allowed the central bank to rebuild its foreign exchange reserves. But the sharp weakening of the naira after President Tinubu came to power hasn’t …
The Indonesian rupiah has continued to slide over the past week and, while we think intervention in the foreign exchange market will remain Bank Indonesia’s primary course of action to prop up the currency, the chances of an interest rate hike on …
Rising inflation to trump growth worries Chile’s economy contracted by a larger-than-expected 0.3% q/q in Q1, but the central bank will be more worried about rising inflation. And while our base case is that the policy rate will remain on hold at its …
At the start of the war in Iran, we outlined two scenarios for how the conflict might evolve and how the global economy would be affected. In our baseline scenario, we assumed that the conflict would draw to a close by the start of May and that energy …
Israel’s economy already appears to have picked up following the war-induced fall in GDP in Q1. But even so, the drop in output last quarter, taken together with the strength of the shekel and weak underlying inflation pressures, suggests that the Bank of …
Japan has weathered the China shock well so far, largely because the sharp weakening of the yen has kept Japanese exports competitive. However, the exchange rate is unlikely to keep weakening rapidly over the coming years and we think that Chinese exports …
Thailand’s growth accelerated in the first quarter of the year, but the economy faces growing headwinds from the conflict in Iran and the surge in global energy prices. Despite recent government stimulus, we think the economy will struggle in 2026. The …
Although bonds have sometimes rallied after severe oil price shocks, we suspect that’s not on the cards just yet. Meanwhile, flattening yield curves at the “ultra-long” end suggest, among other things, fiscal and political risk premia haven’t really …
A soft start to Q2 Domestic headwinds look to have intensified last month, especially when it comes to construction activity. But with external demand picking up and the electronics sector in an upswing, we still think that China’s economy is on course to …
Some commentators have been arguing that the tax changes announced in last week’s Budget will end the 30-year super cycle in housing. By contrast, we’re not convinced that the attractiveness of housing as an investment has diminished much. While the …
Net lending by banks to commercial real estate increased to $11.2bn in April, up from $5.1bn in March and the strongest reading since December 2025. Within that, net lending to multifamily saw a $0.9bn rise, while commercial lending excluding farms rose …
15th May 2026
Contraction in GDP, with inflation to the downside The 0.2% y/y contraction in Russian GDP in Q1 underlines that the economy had entered the Iran war with very weak momentum and we’re expecting GDP to do little more than stagnate this year, despite the …
Strong domestic demand will concern BanRep The 0.6% q/q rebound in Colombian GDP in the first quarter – and particularly strong growth in consumer spending – adds to reasons to think that the central bank will opt for at least one more interest rate hike …
This Weekly Roundup highlights analysis on a looming oil supply crunch, an extreme scenario around the Iran conflict, the macro costs of the battle for Number 10, the outcome of the Trump-Xi meeting and more. 1. The closure of the Strait of Hormuz is …
SA impeachment process to weigh on policymaking The restart of impeachment proceedings against President Ramaphosa threatens to hinder progress on the government’s reform agenda and, in turn, its ability to lift growth above 2% on a sustained basis. …
Another sharp reversal in US equities after a new all-time high and dotcom bubble parallels at every turn make the fragility of this rally clear. We think AI sentiment can lift the market further this year, but the rally is likely to remain fragile until …
Kevin Warsh now begins his four-year term as Fed Chair, but the April price data suggest he will have a tough time persuading his FOMC colleagues that they should cut interest rates again in this cycle. Indeed, following the upside surprises to CPI and …
The Summary of Deliberations from the Bank of Canada’s April meeting didn’t give too much away, though the optimist in us would argue that the tone was less hawkish than in prior communications. This supports our view that the degree of tightening priced …
Will Copom cut again? Financial markets this week appear to be wavering on the idea that Brazil’s central bank will opt for a third consecutive 25bp cut when it next meets on 17 th June. The cut was almost fully priced in at the end of last week; now it’s …
The outlook for aggregate euro-zone industrial output is weak, but there are some sectors that we expect to continue growing at a decent pace. Industry has been struggling for some time in the euro-zone and data released over the past week reinforce this. …
Recovery in manufacturing beginning to broaden The 0.6% m/m rise in manufacturing output in April was partly due to a rebound in the transportation equipment sector, but there are also signs that the AI buildout is beginning to support activity. With the …
Large rise in inflation likely to put rate cuts on back-burner The rise in Nigeria’s headline inflation rate from 15.4% in March to 15.7% y/y in April, alongside the central bank’s concerns about its credibility, suggests that monetary easing will remain …
Will rupiah weakness prompt BI to hike rates? Indonesia’s central bank (BI) appears increasingly concerned about the weakness of the rupiah but, for now, we suspect that it will continue to rely on FX intervention rather than hike interest rates. The …
We’ve been saying for some time that removing Keir Starmer as Prime Minister would result in a weaker pound and higher gilt yields as an alternative is more likely to implement looser fiscal policy. What’s more, we said the size of those moves would …
Stabilisation limited to single-family homes There were some encouraging signs of stabilisation in the headline housing market indicators for April, but the further decline in the sales-to-new listing ratio and recent rise in fixed mortgage rates suggest …
Decent gain not only due to higher prices The 1.0% m/m rebound in manufacturing sales volumes in March takes them back in line with their 2025 average and the jump in the S&P Global manufacturing PMI in April bodes well for the near-term outlook. That …
Simple question, tricky answer If anybody hoped that the latest monthly reports from the EIA, IEA, and OPEC would provide clarity about how much oil demand has fallen since the start of the Iran war, they would have sadly been disappointed. As shown in …
Westminster is gripped by the game of thrones around Labour's slow-mo leadership drama, which could deliver the UK's seventh prime minister in ten years. But for markets and the economy, the stakes are very real. Chief UK Economist Paul Dales tells David …
While we are still waiting for full details on what was agreed at the summit between Presidents Trump and Xi, it seems mostly just to have cemented the existing trade truce. This should ensure near-term stability in US-China ties. But underlying tensions …
Policy tweaks fail to boost currency Policymakers’ concerns about the depreciation of the rupee have again come to the fore this week. The hike in tariffs on imported gold (from 6% to 15%) has been taken straight from the 2013 “Taper Tantrum” playbook …
All of our coverage on the Middle East conflict can be found here . Fiscal timeline outlined in Hungary Hungary’s new government was formed at the weekend and, in his first comments to parliament this week, Finance Minister Karman reiterated plans to put …
Trump-Xi promises may prove largely empty Some details have already started to emerge from the Trump-Xi summit in Beijing. President Trump told US media that China has agreed to buy 200 Boeing aircraft. More announcements may follow once the presidents …
