Two years ago, we argued that structural forces – from AI-driven productivity gains to ageing demographics and higher government borrowing – would push equilibrium real interest rates in the US and across developed markets far above what markets were then …
11th September 2025
Note: We’ll be discussing our r* estimates in light of 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 . Recent bond market movements suggest that equilibrium …
CPI data keep the Fed on track for a 25bp cut Although the 0.4% m/m rise in the all-items CPI was slightly stronger than expected, our estimates still point to a target-consistent 0.18% m/m gain in the core PCE deflator last month. That cements the case …
ECB on hold, for now The ECB’s decision to leave its deposit rate unchanged at 2.0% today and offer no guidance on future rate decisions was in line with expectations. The Bank is unlikely to change interest rates again this year, but we think the risks …
CBRT keeps a hawkish message The decision by Turkey’s central bank to slow the pace of easing to 250bp didn’t come as a major surprise but the fairly hawkish communications support our view that real interest rates are likely to remain fairly high over …
Norges Bank signalled last month that it would cut interest rates later this year, but we expect it to leave policy unchanged next week. It will probably reduce interest rates before year-end, but any interest rate reductions will be limited, leaving the …
The deterioration in Indo-US relations appears to have expedited New Delhi’s efforts to strengthen ties with Beijing, as highlighted by Prime Minister Modi’s first visit to China in seven years last week. But the deep-rooted view within India that China …
Struggling housing market continues to lose momentum August’s RICS survey shows that the combination of weak employment, rebounding mortgage rates and fears over tax rises in the Budget on 26 th November are holding back housing activity, while rents …
July Summary of Deliberations flagged support for cuts if labour market softened Recent data confirm increasing slack in the jobs market Balance of risks now favours a 25bp cut, consistent with market expectations Officials indicated in July that they …
10th September 2025
Upside inflation risks mean speculation about 50bp cut look overdone Appointment of Stephen Miran could lead to a rare triple dissent New projections still likely to show a higher interest rate path than implied by markets Easing labour market conditions …
All-time highs in the S&P 500 and years of strong gains don’t mean the index is set to run out of steam. Rather than the level or momentum of the market, history suggests that returns from here will depend on what happens to Fed policy, US economic …
The latest PREA consensus forecasts showed a minor downgrade in the all-property forecast, both for the next two years and the 2025-29 average. That was driven by downgrades in the residential, senior housing and self-storage sectors. Despite these latest …
Weak employment data have revived recession talk in several advanced economies. However, detecting recessions early requires examining a range of indicators rather than just focusing on the labour market. A holistic assessment of the latest data suggests …
Overview – We expect growth in Latin America to slow next year – in contrast to the consensus and IMF view for growth to stabilise or even pick up in 2026. While the impact of US import tariffs will generally be limited, we think analysts are …
Threats to central bank independence in the emerging world are, thankfully, rare at the moment (Indonesia is one current point of concern though). However, efforts to undermine independence would probably have bigger negative repercussions in emerging …
The strength in IT equipment investment this year suggests the shift towards AI development and adoption is happening even sooner than our initial upbeat assumptions, posing an upside risk to the near-term growth outlook. While higher borrowing costs and …
While the prospect of looser Fed policy has helped to drive the S&P 500 to new highs in recent months, there is another reason the index has surged. This isn’t an increase in its valuation compared to that of 10-year inflation-protected Treasuries, which …
Tariff effects feeding through only slowly The downside surprise to the PPI in August was driven by a compression of trade margins, reversing their unexpected widening in July, and therefore overstates the softness of producer prices. Nonetheless, the big …
Inflation easing, but rates to remain on hold for now The small fall in inflation in Brazil, to 5.1% y/y in August, is unlikely to change the central bank’s tone at its meeting next week. Interest rates will remain on hold at 15.00%. But with inflation …
Poland has ramped up defence spending faster than any other NATO country in the past few years, but we estimate that the boost to GDP growth has been less than 0.2%-pts per year. A high reliance on imports as well as structural weaknesses in Poland’s …
Concerns that Indonesia’s government will breach it’s 3% of GDP budget deficit rule have only grown after the replacement of respected Finance Minister Sri Mulyani. While the fiscal risk premium in Indonesia’s sovereign dollar bonds appears to have …
The weak labour market means it’s too soon to conclude that the share of mortgages in arrears won’t rise further, although it will remain low relative to past standards. The number of mortgages in arrears, defined as the borrower failing to make …
Overview – After an exceptionally strong first half of 2025, India’s economy faces a more challenging rest of this year and 2026 in the face of punitive US tariffs. But they could get rolled back and, even if they don’t, India will remain a relative …
The number of visas granted to foreign students looking to study in the UK saw a substantial rise in Q2, likely reflecting a substantial fall in the numbers entering the US as restrictions there have been tightened. While the UK government may respond by …
This Update answers the key questions on recent developments in Indonesia and the implications for fiscal and monetary policy, as well as the country’s financial markets. We discussed many of these points in a Drop-In yesterday, a recording of which can …
The Organisation of the Petroleum Exporting Countries (OPEC) shows no signs of slowing down in its “golden years”, but question marks about the future of oil demand, as well as the resilience of non-OPEC supply, will weaken the economic ties that bind the …
Gold prices continue to set record highs, oil remains under downward pressure, and OPEC+ is facing renewed questions about its long-term cohesion. Against this backdrop, our Commodities team hosted an online briefing to examine the outlook for gold, oil …
Inflation fall gives CBE room to push ahead with rate cuts Egypt’s headline inflation rate decreased from 13.9% y/y in July to 12.0% y/y in August, its slowest pace since March 2022, which supports our view that the Central Bank of Egypt (CBE) can …
Uptick in underlying inflation still on shaky foundations Headline CPI inflation slipped back into negative territory last month, but this just reflects volatile food prices. Underlying inflation has actually ticked up lately. This is mostly due to …
The (largely expected) fall of the French government has made limited impact on euro-zone financial markets. But it represents another step in the gradual deterioration of the outlook for French government bonds . We continue to think that the spread …
9th September 2025
This page has been updated with additional analysis since first publication. Preliminary revision points to weaker recent employment growth The preliminary benchmark estimate points to a massive 911,000 downward revision to the level of non-farm payroll …
Economic growth has been fairly resilient to tariffs so far and, as long as tariffs stay around the 15% agreed in the EU-US trade deal, the hit to activity should be small. But growth will be sluggish over the rest of this year and next as low confidence …
Nigeria policy shift has led to success in monetary policy reform and a stronger balance of payments position. But reforms have so far fallen short is reining in the large budget deficit. While non-oil revenues have increased and our base case is that the …
Uptick in inflation won’t prevent Banxico from cutting again The small rise in Mexican inflation to 3.6% y/y in August still leaves the headline rate within Banxico’s target range and means that policymakers are likely to deliver another 25bp cut, to …
This Update answers the key questions that we received during this morning’s online Drop-in on the collapse of France’s government. (The recording is available here .) The key points are that while France is some way from a fiscal crisis, political …
Concerns about the independence of Bank Indonesia have grown following the announcement of a fresh “burden-sharing” agreement with the government and, most recently, the removal of respected finance minister Sri Mulyani from her post. The experience from …
Recovery back on, but likely to be bumpy from here South Africa’s economy expanded by 0.8% q/q in the second quarter of the year, an acceleration on the muted 0.1% expansion in Q1, raising hopes that the recovery is back on track. We expect further modest …
Global property markets have been recovering through the first half of 2025, with tariffs and other uncertainties showing only limited impact so far. But the recovery remains slow: REITs continue to trade at sizeable discounts to NAV, closed-end fund …
OPEC+ seems to be cautiously optimistic on the strength of the oil market as it remains committed to unwinding voluntary output cuts. However, we suspect it will become increasingly clear that the oil market cannot fully absorb additional supply at …
8th September 2025
