The Bank of Korea left interest rates unchanged today at 2.50% but made clear hints in its statement and press conference that this does not mark the end of the easing cycle. With growth set to struggle and inflation likely to remain subdued, we are …
28th August 2025
What tensions will yet erupt as the US–China economic relationship unravels? What will the global economy look like in 2040? And what should business and government leaders be doing now to adapt to an era of economic fracturing? The Fractured Age: How the …
21st August 2025
Interest rates on hold, but BoK to resume easing cycle soon The Bank of Korea left interest rates unchanged today at 2.50% but we doubt this marks the end of the central bank’s easing cycle. The announcement was correctly predicted by 27 out of 35 …
Falling short-dated Treasury yields seem to have sparked a rotation within the US stock market in recent weeks. But we doubt this rotation will persist, given our view that Treasury yields will not keep falling and that enthusiasm for AI will pick up. We …
27th August 2025
The UK’s fiscal and balance of payments position may be far from a picture of health but speculation that it may be forced to turn to the IMF for a bailout is far-fetched. The risks are greater for France, but it is not on the brink of a bailout either – …
Capital inflows into EM bond markets appear to have surged over the past month, but outflows from EM equities picked up. Most EMs would be well-placed to cope in the event of a spike in capital outflows, with currency risks concentrated in those with …
The announcement that Turkey will end the lira-protected deposit scheme (KKM) will only have a limited impact. The scheme has largely been phased out already. But there’s still more to do to increase the share of lira deposits in the banking sector, which …
The struggling housing market is unlikely to benefit from the Fed rate cuts we have built into our outlook (four 25bp cuts through mid-2026). These cuts are already been priced in by markets, while mortgage rates – anchored to longer-term yields – may …
Africa Chart Pack (Aug. 2025) …
Increases in new supply mean Prague industrial rents are likely to hold steady over the rest of this year. But improving economic growth, a strong e-commerce market and attractive affordability compared with euro-zone neighbours should see rental growth …
Saudi Arabia’s Vision 2030 reform programme passed the halfway mark last year and we published an in-depth Focus evaluating the progress so far. This Update takes a fresh look at how close the government is to meeting its targets. In short, while there …
Solar OPEC won’t solve overcapacity in China Overcapacity in China is becoming a growing concern for local policymakers and, as we’ve previously covered, green technology sectors are at the heart of this issue. (See here .) At least in the solar industry, …
Defence spending across Asia is set to rise over the coming years, driven in part by increased pressure from the US for its allies to shoulder more of their own security costs. While the overall boost to demand in the region is likely to be modest, …
With Europe still returning from the beach and the US gearing up for Labor Day, I’ll spare you a full note this week. But for those easing back into work, here’s a quick recap of the key developments of recent weeks. Three stand out. A September cut, …
We believe monetary easing has further to run in the Antipodes. The case for policy stimulus is clear-cut in New Zealand, where the output gap is deeply negative. We have long argued that the RBNZ will cut rates to 2.5% this cycle, and analysts and …
Rebound in price pressures could prompt less RBA easing While most of the jump in headline inflation in July reflected volatile components that the RBA will ignore, underlying inflation also rebounded. Our base remains that the RBA will continue to …
The unilateral reduction in tariffs by Ottawa in the US-Canada trade war raises the likelihood of the Bank of Canada resuming its easing cycle next month given that, with US tariffs unchanged, the upside risks to inflation have eased while the downside …
26th August 2025
The recent rise in services inflation in advanced economies has been driven by temporary and economy-specific factors, rather than a general trend. The unwinding of these factors, together with weaker labour demand, should weigh on services inflation …
Activity in many parts of the region, and Brazil in particular, slowed in Q2. Mexico was a key exception, although we doubt that the robust Q2 marks the start of a marked pick-up in growth. Meanwhile, the inflation picture across Latin America has become …
President Trump’s attempt to fire Fed Governor Lisa Cook looks set to go the courts, which will determine the extent and limits of the administration’s ability to influence monetary policy. It remains unlikely that Trump will be able to capture a majority …
Further falls cast doubt on our already bearish forecast Although we expect house prices to regain some momentum in the third quarter, the fourth consecutive monthly decline in June suggests that risks to our forecast of a 1% increase this year are …
A strong start to the third quarter July’s surprisingly positive durable goods orders numbers suggests that businesses may be acclimatising to tariff policy uncertainty and upping their investment. Weak capex survey intentions means we still expect …
Scope for easing ahead of election looks limited The Hungarian central bank (MNB) left its base rate on hold again today at 6.50%, and we think that the scope for monetary easing ahead of parliamentary elections in April 2026 will be limited. While the …
The Bank of England’s interest rate cuts haven’t boosted the economy much partly as they have been dampened by global developments. To deliver a bigger boost, the Bank would need to cut rates faster and further than widely expected, although the Bank is …
The French prime minister’s decision to call an early vote of confidence is most likely to trigger his replacement with yet another prime minister or (less likely) fresh legislative elections. Either way, France’s budget deficit will remain well above the …
Asia Chart Pack (August 2025) …
Despite the muted reaction to the latest developments, Trump’s efforts to bend the Fed to his will are a genuine threat to US markets. At the time of writing, the market reaction to Trump’s attempted firing of Fed Governor Cook had been fairly minimal. …
RBA’s easing cycle has much further to run Although the RBA will retain its cautious approach for the time being, we believe the Bank will ultimately cut rates further than most are predicting . The minutes of the RBA’s August meeting confirmed that the …
The Bank of Japan is overplaying the importance of structural changes in Japan’s labour market in explaining the post-pandemic pick-up in cost pressures. Even so, we still expect inflation to be sustained around the BoJ’s 2% target over the longer term. …
All-property capital values rose modestly by 0.1% in Q2, suggesting a market floor, with cap rates falling by 5 bps. However, we expect values to see limited upside due to the narrow spread to risk-free rates. At a sector and metro level, industrial, …
22nd August 2025
The dollar has given back most of its gains from earlier in the week after Fed Chair Powell’s Jackson Hole speech cemented expectations for a rate cut at the September FOMC meeting. That leaves the greenback on the backfoot heading into autumn. Even so, …
We doubt today’s rally in Treasuries and renewed weakness in the dollar will gather steam, despite Jerome Powell’s acknowledgement at the Jackson Hole symposium that an adjustment in the FOMC’s policy stance may be warranted. One reason is that a 25bp cut …
Labour demand could be even weaker In the wake of the disappointing July payrolls release, which revealed an unexpected near-stagnation in employment over the summer, Fed Chair Jerome Powell acknowledged in his Jackson Hole speech that “downside risks to …
Data released this week showed that headline inflation fell to 1.7% in July, from 1.9%. The headline rate is still picking up the carbon tax removal in April; excluding energy, inflation was unchanged at 2.5%. Moreover, the average of the CPI-trim and …
Powell on board with September cut Fed Chair Jerome Powell’s speech was more dovish than markets were braced for. His conclusion that “ with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our …
Strong domestic demand fuels surge in imports One common theme to emerge from the recently-released Q2 GDP data from Colombia and Chile is the persistent strength in imports, which increased by 2.6% q/q and 4.8% q/q respectively in real terms. Over the …
China’s government is making louder noises about boosting consumption, a shift that’s critical not just for rebalancing its investment-heavy economy, but also for easing global imbalances. But are these signals part of a real policy pivot? China Economist …
Talks intensify over security guarantees The intensification of talks to end the war in Ukraine signals cautious progress, but Russia and Ukraine remain far apart in their key demands. And Russia’s recalcitrance has become increasingly clear in the last …
Oil prices have fallen back in the wake of the Israel-Iran ceasefire and, with more oil supply coming online, we think that prices will decline further. Rising oil output will lead to faster GDP growth in the Gulf, although this will mask weakness in …
A strong June, but potential trouble ahead The strong rebound in June retail sales should reassure the Bank of Canada that consumer spending is holding up, although the flash estimate of a drop back in sales in July implies that growth remains muted on …
Economic data released this week cast some doubt on our forecast that euro-zone GDP growth will start to accelerate in the latter part of this year. Admittedly, the Composite PMI for the euro-zone rose again in August. However, it pointed to only a small …
Kenya’s scramble for finance and China alignment This week brought fresh details about Kenya’s strategy to deal with its fiscal problems, which appears increasingly reliant on liability management operations. This may alleviate short-term liquidity …
Though future changes to US tariffs could still cause some volatility in equity markets, we think other factors will mean equities outside the US continue to make decent gains for the rest of this year and next. It has generally been a good few weeks for …
July’s better-than-expected public borrowing figures did little to brighten the gloomy outlook ahead of the Autumn Budget. (See here .) The 44 basis point rise in 20-year gilt yields since the Spring Statement suggests the Chancellor’s headroom against …
Social security tweak will hurt near-term activity From 1 st September onwards, companies in China and their employees will no longer be able to avoid making social security contributions. This will pave the way for higher pay-outs over the medium-term …
EU natural gas: a brief climb before the steep drop The Trump-Putin summit in Alaska, as well as the subsequent meeting between President Trump and European leaders, didn’t deliver a breakthrough towards reaching an end to the war in Ukraine. In fact, it …
Korea – central bank to resume easing cycle After lowering interest rates by a full 100bps between October 2024 and June 2025, the Bank of Korea hit pause at its July meeting. Now, attention turns to Thursday’s decision – and it looks set to be a close …
The sharp rise in euro-zone negotiated wage growth to 4.0% in Q2 was entirely due to base effects. In the coming quarters the labour market should continue cooling, causing negotiated wage growth (and other measures of wages) to fall to a level consistent …
Overview – UK commercial property rental growth continues to surprise on the upside, but the capital value recovery is already running out of steam. Looking ahead, weak economic growth, a narrow spread between property yields and risk-free rates, and …
