We explained in our UK Economic Outlook that the Chancellor will probably need to raise about £27bn (0.8% of GDP) in the Budget on 26 th November (see our Fiscal Headroom Monitor ), mainly via higher taxes on households, and that this could lower GDP …
10th October 2025
When will Brazil’s labour market soften? A key debate doing the rounds in Brazil this week is how long it will take for shifts in the economic cycle to feed through to a weaker labour market and give Copom room to ease monetary policy. The economy is …
Bumper employment figure gives Bank pause before easing further The broad-based jump in employment in September reversed much of the weakness in prior months and will help reassure policymakers that they can afford to focus on the upside risks to …
The decision by OPEC+ to raise its output quotas by 137,000 bpd for November extended the cautious approach that the group adopted in September after the unwinding of its first tranche of output cuts. (See Chart 1.) Recall that media speculation in the …
This week has seen more evidence that France’s fiscal position is unlikely to improve and that Germany’s reforms will be very modest. France’s fiscal troubles get worse Investors appear to be relieved that there may not be early parliamentary elections in …
Spending remains subdued despite equity rally After a tepid pick-up earlier in the year, consumption growth appears to have lost steam again recently. The services PMIs did rise over the summer, as did the services component of our China Activity Proxy …
Takaichi will probably still become PM The departure of long-standing partner Komeito from Japan’s ruling coalition means that the election of Sanae Takaichi as PM is no longer guaranteed but we still expect her to declare victory eventually. According to …
Rise in trade surplus could spell trouble Vietnam’s latest GDP data, released over the weekend, showed that growth remained robust at 8.2% y/y in Q3, underpinned by continued strength in exports. The resilience of exports is particularly notable given …
Bilateral deals would help boost competitiveness There has been a flurry of activity on bilateral trade deals this week. UK Prime Minister Keir Starmer was in India in an attempt to “turbocharge” trade between the two countries following the signing of …
RBNZ will deliver final 25bp cut in November In September 2024, we predicted that the Reserve Bank of New Zealand will lower interest rates to 2.25%. At that time, the OIS markets foresaw rates only falling to around 3%. With the RBNZ this week slashing …
Takaichi victory upends interest rate expectations The victory of Sanae Takaichi in Saturday’s LDP leadership elections sent shockwaves across financial markets as the yen plunged, bond yields climbed and the Topix surged. While opinion polls had seen …
We now think the yen will appreciate a bit more slowly against the US dollar than we’d previously forecast, but we’re revising up our projections for Japan’s stock market. The surprise victory of Sanae Takaichi, who is widely seen as a fiscal and monetary …
The return of La Niña conditions could potentially affect agricultural production in key exporting regions. However, if expectations for a weak and short episode prove accurate, the broader impact on agricultural prices is likely to be small. By way of …
9th October 2025
The gradual decline of volatility in the US Treasury market over recent months has helped underpin the buoyant mood in equity and credit markets. But, even if Treasury market volatility does not flare up again, it is unlikely to fall much further. In …
The gold price rally has inflated the Turkish central bank’s foreign assets by $30bn this year, strengthening Turkey’s external position but creating an illusion of progress in the rebalancing process underway. Higher gold prices are unlikely to …
China has substantially expanded its rare earth export controls – these now apply not only to a wider range of elements and magnets but, on paper least, any goods that contain them in meaningful amounts. The move risks complicating trade talks with the US …
A path to peace US President Trump announced overnight that Israel and Hamas had reached a provisional peace deal which, if approved by both sides, puts the region on a path to an end of the war and removes a downside risk to the economic outlook for the …
The UK’s high borrowing costs relative to those of France appears to reflect differences in monetary policy and its higher inflation rate, rather than greater fiscal concerns. As inflation in the UK is set to fall and the fiscal risk premium on French …
Easing in Brazil getting closer, Banxico to stick with 25bp cuts The small increases in inflation in Brazil and Mexico in September are unlikely to have a material impact on the next interest rate meetings in both countries. In Brazil, while an easing …
Multifamily is set to be a top-performing sector over our five-year forecast, but returns will differ significantly across the 17 metros in our coverage. Miami and D.C. are likely to struggle as persistent strong supply weighs on NOIs and values, limiting …
The introduction of the EU’s Emissions Trading System 2 will add only a small amount to headline inflation in the euro-zone in 2027, perhaps just 0.1 percentage points. So ETS2 is unlikely to be decisive in determining whether the ECB hits its inflation …
The recent corruption scandal involving flood-control projects has cast a shadow over the Philippines’ infrastructure drive. Yet despite this, the country has seen substantial improvements in roads, ports, and digital connectivity over the past decade. …
Quantitative tightening has not been the main driver of higher bond yields in recent years, but it has contributed. With the process now at or near an end in the US and Canada, the threat that further rises in yields might harm economic activity has …
Our new CE Capital Value Lead Indicator suggests that all-property capital growth may finally turn positive on an annual basis in H2 2025. But importantly , it also suggests that any growth this year will be marginal and that there is a downside risk to …
We recently held an online client briefing (watch a recording here ) to discuss the US economic outlook. Here we answer some of the most frequently asked questions, including around AI's role in shaping the outlook. Our US Economic Outlook argues that …
Dovish BSP hints at further easing The Bangko Sentral ng Pilipinas (BSP) cut its main policy rate by a further 25bps today (to 4.75%) and the relatively dovish tone of its accompanying statement suggests that more easing is likely. We expect at least …
Japan may record a rare budget surplus this year which means that the incoming PM has more fiscal leeway than is generally acknowledged. However, as that improvement won’t be confirmed until late-2026, it wouldn’t stop bond markets from baulking at the …
Budget uncertainty continues to restrain housing activity September’s RICS survey provides further evidence that the prospect of tax rises in the Budget on 26 th November has put the housing market on ice, particularly in London. If taxes on property were …
Broad support for looser policy, despite lingering inflation concerns The minutes of the Fed’s mid-September FOMC meeting confirm that “most participants observed that it was appropriate to move the target range for the federal funds rate toward a more …
8th October 2025
OPEC+ undershoots, copper goes for gold OPEC+’s decision to raise its output quota by 137,000 bpd in November confounded reports of a larger rise in the run-up to the decision and provided short-lived support to Brent crude prices. In any case, the …
NBP delivers dovish surprise, but scope for cuts close to being exhausted The decision by the National Bank of Poland (NBP) to cut its policy rate by 25bp today, to 4.50%, was a dovish surprise to most analysts (including ourselves), although we think the …
We held an online Drop-in session yesterday (see here for a recording) to discuss the US economic outlook. This Update answers several of the questions we received, including the role that AI will play. Our US Economic Outlook argues that the US is set …
Given that “FOMO” appears to be creeping into the gold market, it has become even harder to objectively value gold. In our view, gold prices seem likely to grind higher in nominal terms over the next couple of years, but the pace of the current rally will …
We're hosting a special in-person roundtable event at our London office on Wednesday 12th November to discuss if the Chancellor’s second Budget on 26th November will be as big and as bad for the economy as her first, and if it will dampen or ignite the …
NBR to stay on hold despite weak economy The National Bank of Romania (NBR) left its policy rate on hold today, at 6.50%, and despite signs that the economy is struggling in response to recent fiscal tightening, we think interest rates will be left on …
The global economy will remain relatively resilient in the face of mounting headwinds. However, growth will become increasingly unbalanced, with the US leading the way while Europe and China struggle. As we anticipated in our Q2 Global Economic Outlook , …
We expect euro-zone GDP growth to remain fairly slow in the coming years. Germany’s fiscal stimulus should provide a temporary and fairly modest boost, but we don’t think that it will do much to raise growth prospects elsewhere. Meanwhile, we forecast …
The prospect of around £27bn of tax hikes in the Budget on 26th November poses a downside risk to our forecast for GDP to grow by 1.2% in 2026 and by 1.5% in 2027. But it adds to our views that CPI inflation will fall further than most expect next year …
We expect the UK stock market will continue to underperform its more tech-heavy US counterpart as enthusiasm for AI continues to grow. What’s more, if the bubble in AI were to burst, we think there is no guarantee that the large gap in valuations between …
The ongoing investigation into corruption in the Philippines brings the risk of further protests over the coming months. So long as any unrest is limited in scale and duration, the economic and financial market impact is likely to be limited. The bigger …
The RBNZ today dealt the New Zealand dollar another blow, but we think it will recover before long and that the Australian dollar will stop falling. The same can’t be said, though, for the European currencies that have struggled alongside the kiwi and …
A pause, not an end to the easing cycle In a surprise move, Thailand’s central bank (BoT) left interest rates unchanged at 1.50% today. However, it also signalled that this was unlikely to mark the end of the easing cycle. With growth set to remain weak …
German industry still in deep trouble The slump in German industrial production in August was partly due to temporary car plant closures for the summer holidays, which should prove temporary. But that wasn’t the whole story and previous signs of a …
GDP growth will slow from its current above-trend rate to a more sustainable pace. However, with underlying inflation set to remain above the Bank of Japan’s 2% target, we expect the Bank to resume its tightening cycle in January and lift its policy rate …
Inflation set to fall significantly in the coming months CPIF inflation edged down in September and is likely to fall much more significantly next year – to around just 1%. Despite that, we think the Riksbank will leave its policy rate on hold for the …
While the economic case for tighter monetary policy remains intact, we suspect that the Bank of Japan will use the pressure by Japan’s incoming government as an opportunity to delay rate hikes until January. Just one week ago, the OIS markets thought that …
RBNZ will lower rates to 2.25% The RBNZ signalled that further reductions are on the cards when it slashed the overnight cash rate by 50bp today and we think it will eventually lower rates to 2.25%. The RBNZ’s decision to cut the cash rate from 3.0% to …
Mainland China’s office market has been in a prolonged downturn since 2018 as structural headwinds, including weak economic growth, cautious corporate hiring, and rampant new supply have kept vacancy high and rising. We expect this pattern to persist, …
Wage growth will remain strong enough to prompt BoJ tightening The sharp slowdown in wage growth in August largely reflects the end of the summer bonus season and regular earnings growth seems to be settling around 2%-2.5%. According to the preliminary …
