The Federal Reserve’s much-anticipated start to monetary easing has begun and policymakers across emerging markets – and investors with exposure to them – are watching closely to see how these economies will be buffeted by falling US interest rates. But …
19th September 2024
The Norges Bank left rates unchanged today and shifted its guidance only very slightly in a dovish direction. Whereas the Bank does not expect to cut rates until Q1 next year, we think it is likely to do so in December and to then cut rates fairly rapidly …
While the green transition and AI-related use will boost demand for industrial metals over the rest of this decade, we expect this to largely be offset by a substantial contraction in demand from China’s construction sector. Against this backdrop, and …
CBC in no rush to join regional easing cycle Taiwan’s central bank (CBC) left its main policy rate unchanged today (at 2.0%), and with growth set to accelerate we expect rates to remain on hold throughout 2024 and 2025. In contrast, the consensus is …
Norges Bank stays hawkish In contrast to the uncertainty surrounding yesterday’s Fed decision, the Norges Bank’s announcement that it is leaving its policy rate unchanged at 4.5% was correctly anticipated by all the analysts polled by Reuters, so the main …
Markets barely reacted to the Fed’s 50bp rate cut, on balance, and our base case is that further cuts won’t move the needle too much either. The Fed started its easing cycle with a bang on Wednesday with a 50bp cut. That said, it was probably a “hawkish …
An acceleration in fiscal spending during the final months of the year should mean the 2024 growth target of “around 5.0%” is met, but only just – we now expect growth of 4.8% this year. China’s slowdown is likely to continue over the coming years as …
Unemployment rate will approach 5% next year The labour market and population data released today are consistent with our view that the Reserve Bank of Australia will only lower interest rates in Q2 2025. For a start, the 47,500 rise in employment in …
This page has been updated with additional analysis since first publication. RBNZ still on course to loosen policy aggressively Economic activity in New Zealand last quarter wasn’t quite as weak as most had anticipated. However, we still think there’s a …
Copom hikes, leaves door open to more Just four months after last lowering interest rates and hours after the US Federal Reserve started its easing cycle with a bang, Brazil’s central bank delivered a 25bp hike to the Selic rate, to 10.75%, as officials …
18th September 2024
The Fed did cut its policy rate by a bigger 50bp today, to between 4.75% and 5.00%, but the vote was not unanimous and the new rate projections point to smaller 25bp cuts at the remaining two FOMC meetings this year. Accordingly, today’s announcement is …
A hawkish 50 The Fed did cut its policy rate by a bigger 50bp, to between 4.75% and 5.00%, but the vote was not unanimous and the new rate projections only shows an additional 50bp of cuts between now and the end of this year. Accordingly, today’s …
Policymakers have put themselves in a tricky spot ahead of today’s pivotal FOMC announcement. But whatever the size of the policy rate cut they end up delivering, the outlook for the US economy is more important in determining where Treasury yields and …
Unlike their counterparts in the Fed, policymakers at the Riksbank have ruled out making a bumper 50bp rate cut anytime soon. Instead, they are likely to cut their key policy rate by 25bp at next week’s meeting. Further ahead, we think the Riksbank will …
While media attention has been on the soaring prices of coffee and cocoa, the prices of many grains have slid lower since the start of the year. We think that prices will fall further by the end of 2025 as the market looks set to be amply supplied. …
Rebound in housing starts The large rise in housing starts in August was due to a rebound in starts in the south, confirming that the July slump was a temporary disruption caused by Hurricane Beryl. The increase in permits, particularly in the …
Note: This Outlook was originally published on 17th September . It was updated on 1st October to reflect a revision to our ECB interest rate view . Overview – The euro-zone appears to have lost some momentum and is likely to remain sluggish in the coming …
South Africa’s mixed recovery South Africa’s economy is enduring a clear divergence in its economic recovery. Consumer-facing sectors appear to be performing better but industry, particularly mining, continues to struggle. We think interest rate cuts will …
We doubt the announcement by Amazon that it is requiring office-based workers to return full-time marks the start of a reversal in the remote work share. It is far from clear that requiring five days a week in the office raises worker productivity and it …
Overview – The economy is cooling but remains primed to grow by 6-6.5% per year between 2024 and 2026, which would put India on course to become the world’s third-largest economy in the next couple of years. Headline CPI inflation is likely to remain …
Drop in inflation sets the stage for rate cut tomorrow The dip in South Africa’s headline inflation rate, to 4.4% y/y, in August and the further decline in core inflation all but seals the deal on the SARB start an easing cycle tomorrow. We have pencilled …
The US Federal Reserve looks certain to start its loosening cycle this evening and, by virtue of their dollar pegs and open capital accounts, central banks across the Gulf will follow suit. Lower interest rates may provide relief to firms and households …
Bank Indonesia today kicked off its easing cycle with a 25bps cut, taking its main policy rate to 6.00%. With inflation under control and the rupiah rebounding against the US dollar, further cuts are likely. While the decision was unexpected (it was …
This page has been updated with additional analysis since first publication. Rise in services inflation makes September rate cut even less likely CPI inflation stayed at 2.2% in August (consensus & CE 2.2%, BoE 2.4%), but the rise in services inflation …
Even though state and federal budgets point to a sharp slowdown in public demand in 2024/25, our analysis suggests that the public sector will keep providing a sizeable boost to GDP growth. And if we’re right that private demand will pick up as real …
Drag from net trade will moderate Q3 GDP growth Even though the trade balance held up much better than most had anticipated in August, net trade will still provide a large drag on Q3 GDP growth. The 5.6% y/y rise in export values was much weaker than the …
We doubt the gap between expected interest rates in the US and its trading partners will keep shrinking, given what’s priced into the money markets. That could potentially buoy the dollar in time, assuming the Fed shies away from slashing its policy rate …
17th September 2024
Rent growth slowing rapidly Increased supply and weaker demand are pushing down rents in several cities. That raises the risk of another leg down for apartment prices, despite the recent drop in mortgage rates. The housing market is struggling for …
Despite the US being a net oil exporter, the recent plunge in the oil price will be a tailwind for the economy, as lower gasoline prices support consumer confidence and real consumption. The Fed will largely look through the impact on headline inflation, …
We doubt the small fall in Nationwide house prices in August was the start of a renewed downturn. Surveys suggest the recent declines in mortgage rates have led to an increase in housing demand, while a significant near-term pick-up in supply appears …
Overview – We have generally revised down our growth forecasts for this year and next. Weakness in the euro-zone will remain a drag on export sectors across Central and Eastern Europe (CEE) in the coming quarters, while tight policy will take some heat …
Reports of retail’s death have been exaggerated. After a long and painful adjustment, the retail’s potential to deliver decent returns means our commercial real estate team now thinks it’ll be the second best performer among the major sectors over our …
Manufacturing output rebounds, but challenges remain Manufacturing output rebounded strongly in August as the temporary disruptions to production from the previous month were reversed. Together with last month’s solid gain in control group retail sales, …
Despite the peso’s recent rebound, we suspect that an unstable political and economic outlook means that it, and Mexican financial assets more generally, will perform poorly over the next year or so. Since early April, when the MXN/USD rate hit its lowest …
Consumers remain resilient The stronger-than-expected retail sales data for August suggest that, boosted by rapid wealth gains and falling energy prices, consumers continue to spend freely despite the labour market slowdown. With control group sales …
Mission almost accomplished The return of headline inflation to the 2.0% target in August was mainly due to favourable base effects and is likely to be short-lived, with inflation rebounding to as high as 2.5% by the turn of the year. Nonetheless, the …
After two disappointing years, recent data suggest Europe’s commercial real estate market is stabilising. But will recovery follow and how strong will it be? Join our 20-minute online session on Wednesday 25th September at 10:00 BST as we discuss the …
Germany is heading for a second technical recession in as many years, France’s new prime minister has inherited an intractable public finance problem, and the ECB is planning to lower interest rates only gradually as the euro-zone economy struggles. Our …
EM recoveries are beginning to slow and will continue to do so over the coming quarters. Within this there will be regional variation, with Asia the outperformer and Latin America the laggard. Headline inflation rates will end the year above target in …
Limited data flow since August meeting broadly in line with RBA’s expectations Bank will therefore reiterate pledge to keep rates unchanged this year First rate cut will happen in Q2 next year The Reserve Bank of Australia will probably stick to its …
After two disappointing years, recent data suggest Europe’s commercial real estate market is stabilising. But will recovery follow and how strong will it be? Our property experts held this online briefing about the size and shape – and timing – of …
16th September 2024
We recently held a series of EM-focused client meetings in Switzerland and Germany which covered a wide range of topics, including the impact of global fracturing , AI and the green transition on emerging markets. This Update answers several of the …
A brief respite for the manufacturing sector The 0.9% m/m rise in manufacturing sales volumes in July implies there are upside risks to the flash estimate that total GDP was unchanged at the start of the third quarter, although the negative tone of the …
Low saving rate not a major concern The continued decline in the saving rate, which is now close to a 16-year low, is not a major concern given the recent surge in household net wealth. Furthermore, as the saving rate is calculated from two different …
This week is set to be dominated by one question: will the Federal Reserve kickstart its easing cycle with a 25 or 50 basis point interest rate cut? Market pricing on this question has been swinging around. Having effectively priced out a 50bps cut …
Disinflation continues, CBN in place to cut rates yet Nigeria’s headline inflation rate dipped to 32.2% y/y in August, confirming the disinflation trend is firmly on course as the pass through from previous sharp falls in the naira continues to fade. This …
