Possible tax rises in the Budget on 26th November risk further restraining housing activity next year. What’s more, our new forecast for 10-year gilt yields to fall from 4.71% now to 4.25% next year (3.75% previously) suggests mortgage rates may provide a …
25th September 2025
Yields in Switzerland and Japan may diverge even further over the next couple of years. But we don’t think Japan’s escape from zero rates will diminish the yen’s relative appeal as a safe haven. The Swiss National Bank’s hold today was unsurprising, …
SNB on hold for now, but negative rates to come While the SNB kept its policy rate at zero today and left its inflation forecast unchanged, we still expect policymakers to cut the policy rate into negative territory over the coming quarters. We think that …
Overview – The Australian economy bounced back strongly in Q2, and it increasingly appears that the recovery has legs. In contrast, the New Zealand economy remains mired in a deep slump, and we believe that it will be some time before growth returns to …
China’s stock market got a boost today, as Alibaba announced its latest plans for AI. Despite the challenges faced by China’s economy, we suspect there is more upside for MSCI’s tech-heavy China Index as the country’s own AI+ plan gets going. Admittedly, …
24th September 2025
Overview – China’s economy is much weaker than official figures suggest, but growth has held steady this year despite US tariffs. While both exports and fiscal spending will continue to support the economy over the next year, they will provide less of a …
We suspect the main reason why the long-run unemployment rate has shot up is the surge in immigration since the pandemic, as many of these migrants have struggled to find work. This suggests the equilibrium unemployment rate is a bit higher than it used …
Big budget deficits are fuelling fears about fiscal sustainability, but the potential negative effects on growth are receiving less attention. While Germany is embarking on a major fiscal expansion, the risk of crowding out private sector activity is …
Saudi Arabia’s reform push looks set to take another step forward with suggestions that it will lift foreign ownership limits on local equities before the end of this year. While such a move will help to attract fresh foreign capital inflows, we doubt …
New home sales spike to highest level since January 2022 Lower borrowing costs supported a surge in new home sales in August, and could drive further increases in the coming months, given the continued decline in mortgage rates since then. Seasonally …
US Treasury Secretary Scott Bessent’s renewed pledge to “do what is needed” to support Argentina in a post on X earlier today, including purchases of Argentinian sovereign US dollar bonds and a potential $20bn credit line, should give Argentina’s …
CNB on hold, next move could be a hike The Czech National Bank (CNB) left its policy rate on hold again today, at 3.50%, and in contrast to many analysts who still expect interest rates to be lowered further next year, we think that the risks are skewed …
Inflation edged up, but Banxico still set to cut tomorrow The small rise in Mexican inflation to 3.7% y/y in the first half of September won’t stop Banxico from delivering a clearly-signalled 25bp cut, to 7.50%, at tomorrow’s Board meeting. The outturn …
Overview – The most acute geopolitical and tariff-related distortion in commodity markets has eased, leaving fundamentals more firmly in the driver’s seat going forward. While the Russia-Ukraine war still presents risks to Russia’s energy supply and …
Ifo pours cold water on hopes of German recovery The fall in the German Ifo Business Climate Index (BCI) in September contrasts with the big improvement in the Composite PMI and casts some doubt over hopes that the German economy might be finally turning …
Despite policymakers’ renewed concern over the Thai baht’s rise, there is little evidence that the appreciation of the currency is hurting the economy. We do not expect it to be a major drag on growth over the next year. The baht has gained around 8% …
The risk of high tariffs has now materialised, while inflation remains subdued We think the RBI will cut the repo rate to mitigate downside risks to growth We expect the repo rate to reach 5.00% by the end of 2025 The hit to GDP growth from punitive …
RBA will leave policy settings unchanged in September Bank will reiterate its cautious approach now that growth is firming up Assuming inflation cools further, there will be scope to cut rates to 3.1% by early-2026 The Reserve Bank of Australia is almost …
RBA to remain cautious as inflationary pressures linger on Although the RBA won’t pay much heed to the pickup in headline inflation last month, the strength in core inflation will give it pause for thought. We expect the Bank to only cut rates twice more …
CBN begins what is likely to be an aggressive easing cycle The Central Bank of Nigeria embarked on a monetary easing cycle today with a 50bp cut to its policy rate, to 27.00%, and Governor Cardoso’s confidence that macro stability is here to stay and …
23rd September 2025
MNB in no rush to resume easing cycle The Hungarian central bank (MNB) left its base rate unchanged again today, at 6.50%, and we think that the easing cycle will remain on pause over the rest of this year. While we currently forecast 100bp of cuts in …
Note: We’ll be discussing our r* estimates in light of recent bond market moves, the AI investment surge and other developments in a Drop-In on Tuesday, 30th September at 1000 ET/1500 BST . Register here . Market pricing suggests that investors think …
This page has been updated with additional analysis since first publication. Downside risks to activity growing, but upside risks to inflation linger September’s flash PMIs suggest that the downside risks around economic activity may be growing a bit and …
Slow growth and easing price pressures September’s flash PMIs suggest that the euro-zone economy grew fairly slowly again in Q3 and that price pressures eased. At the ECB’s press conference earlier this month, Christine Lagarde cited “positive underlying …
This page has been updated with additional analysis since first publication. Riksbank cuts policy rate, loosening cycle over The Riksbank cut its policy rate by 25bp to 1.75% today but signalled that this is the end of the loosening cycle. We think rates …
Rising household debt in India should not be a major concern for now given the backdrop of falling interest rates. But it is a risk that will require close monitoring once the easing cycle turns, particularly if higher debt servicing costs lead to …
The White House’s decision to impose a $100,000 application fee for H-1B visas confirms that the Trump administration is also determined to clamp down on legal immigration, which could further reduce labour supply and raise the upside risks to wage …
22nd September 2025
Overview – Our view that capital values still need to fall by 5% at the all-property level keeps our forecasts below consensus. Based on our forecast of a long-term 10-year Treasury yield of 4.5%, appraised cap rates look too low given the outlook for …
While the Bank of Japan (BoJ) is a smaller player in equities than it is in bonds, the central bank acquired lots of shares via its ETF programme . So, it’s hardly surprising the BoJ’s announcement on Friday that it plans to unwind those holdings has …
Our China Activity Proxy suggests that growth picked up a touch last month, but the economy is still growing at less than 3.5% y/y. The services sector has been outperforming in recent months thanks to a boost from strong financial sector activity. …
The ECB’s battle against high inflation has been won and, in our view, it is more likely that inflation undershoots than overshoots the 2% target over the next few years. As a result, we think the ECB may be forced to reduce interest rates next year, so …
We'll be discussing the outlook for the UK economy and the financial markets in a 20-minute online Drop-In at 3pm BST on Wednesday 1st October. (Register here .) The historical data and forecasts contained in this analysis have been updated to reflected …
What will happen to global trade now that the contours of Donald Trump’s tariffs regime are starting to take shape? It’s a question that kept cropping up in talks with clients in Copenhagen last week – for the shipping companies which are so central to …
We recently hosted an online Drop-In session to unpack the September meetings of major advanced economy central banks. (Recording available here .) The key takeaway was that in the US, markets seem to be overestimating how quickly and how far interest …
Viewed in an optimistic light, President Trump’s overhaul of the H-1B visa programme could benefit India’s economy if more high-skilled workers now stay in the country. But to the extent that remittances weaken, that could put the rupee under more …
China’s exports of the New Three are still growing at a strong pace as an increase in shipments to the EU is helping to absorb the hit from US tariffs on trade volumes. While there are signs of weakness in the broader trade data, the extent of China’s …
SARB hold of rates looks temporary The South African Reserve Bank’s decision to leave the repo rate unchanged looks like a pause rather than a halt in the monetary easing cycle. With inflation expectations likely to trend lower from here, the stage …
19th September 2025
The US dollar is set to end the week up against most other G10 currencies after a strong couple of days, driven by investors paring back their expectations for rate cuts after this week’s FOMC meeting. We think this reassessment has further to run: two …
Bank of Canada officials signalled back in July they would support further interest rate cuts if labour market conditions continued to worsen, and this week they delivered, lowering the policy rate by 25bp to 2.5%. The weakening jobs market was not the …
For long-time Fed watchers, Chair Jerome Powell’s press conference this week was a return to the glory days of Alan Greenspan during the 1990s and 2000s, when “the Maestro” first adopted a risk management framework for monetary policy. Given that the …
Recently released details about Germany’s fiscal plans suggest that it may take until the middle of next year to ramp up spending and that less of it will go on infrastructure than initially expected. This reinforces our view that there will be a smaller …
Another flashpoint for US-Colombia tensions The Trump administration’s determination this week that Colombia had failed to meet its counter-narcotics obligations (sometimes termed ‘decertified') marks another step in the deterioration in relations between …
Russia’s fin min tightening budget policy Russia’s finance minister Anton Siluanov announced this week that the government will tighten its budget rule, setting the stage for what is likely to be broad fiscal tightening in the much-anticipated 2026 draft …
Fiscal tailwind to diminish but remain sizeable Data published on Wednesday showed that fiscal spending across the two main budgets slowed last month, adding to growing concerns about economic momentum. But the fiscal data are very volatile, so it is …
Third-quarter consumption growth set to slow moderately The sharp decline in retail sales in July is not as bad as it first looks, with August’s flash estimate pointing to a swift rebound, suggesting the weakness was mostly payback for earlier strength …
