Jump in inflation to delay start of interest rate cuts The larger-than-expected rise in South Africa’s headline inflation rate, to 5.6% y/y, in February means that the SARB is likely to delay the start of its easing cycle until after May’s election. …
20th March 2024
Interest rates left unchanged, first rate cut in June Bank Indonesia left its policy rate on hold at 6.00% at its scheduled meeting today, and hinted at cuts later in the year. With inflation under control and the currency holding up well against the US …
This page has been updated with additional analysis since first publication. UK inflation to fall below 2% in April and the rates in the US and euro-zone We’ll be discussing the outlook for Fed, ECB and Bank of England policy in a 20-minute online …
Housing starts rebound in February The strong rebound in housing starts last month confirmed January’s slump was a weather-related blip. Although we expected starts to bounce back, February’s data were even stronger than we had anticipated. After falling …
19th March 2024
Another good month, but more needed to convince Bank to cut rates The surprise fall in headline inflation to 2.8%, from 2.9%, is further reason to expect the Bank of Canada to cut interest rates soon, although we still think it will wait until June rather …
BoJ won’t embark on tightening cycle as inflation momentum waning The Bank of Japan ended ultra-loose monetary policy today but we don’t think it will raise its policy rate any further. A majority of forecasters polled by Reuters last week were still …
RBA will ease policy in the second half of the year The RBA stuck to its hawkish guns at today’s meeting but we think it will pivot towards policy easing by August this year. The Bank’s decision to keep the cash rate unchanged at 4.35% was correctly …
Weak end to 2023, but better start to 2024 The 0.1% q/q rise in Chilean GDP confirms that the economy had a stop-start recovery over the course of last year, but we think that it will make more solid gains over the course of 2024. Our growth forecast for …
18th March 2024
This page has been updated with additional analysis since first publication . A decent start to 2024 despite a still fragile consumer China’s economy continued to show some improvement at the start of the year thanks to strength in exports and fiscal …
Consumer confidence edges down The small fall the University of Michigan measure of consumer sentiment in March is further evidence that the buoyant stock market alone will not prevent consumption growth from slowing. As the current conditions index was …
15th March 2024
Unwinding of weather distortion boosts manufacturing In line with the rebound in retail sales, manufacturing output was boosted in February by the unwinding of the hit from the winter snowstorms that weighed on production in January. Even as that boost …
Inflation hits 31%, but CBN likely to hold fire on further rate hikes Nigeria’s headline inflation accelerated to a higher-than-expected 31.7% y/y in February and the naira’s latest sharp falls mean it will continue to march towards 35% y/y over the …
This page has been updated with additional analysis since first publication . Rebound in credit growth blown off course Bank loan growth in China decelerated to its slowest pace on record in February, while broad credit growth reversed most of its recent …
Weakness in control group sales suggests January fall wasn’t all due to weather The 0.6% m/m rebound in retail sales in February appears to reflect the unwinding of the drag on sales from the winter storms in early January, but the details suggest that …
14th March 2024
Temporary rebound in sales volumes Lower prices mean that the muted 0.2% m/m rise in manufacturing sales in January was better than it looked, with sales volumes rising by a much stronger 1.1%. That strength was entirely due to the resumption of …
Inflation nudges up as rents continue to rise The increase in Saudi Arabia’s headline inflation rate to 1.8% y/y in February is the highest reading since August and it could creep to above 2.0% y/y in the coming quarters. The bigger picture, however, is …
Sweden CPI (February) Rapid disinflation sets up May rate February's inflation data will strengthen policymakers' conviction that they can begin to cut interest rates in May. The fall the Riksbank’s target CPIF measure of inflation, which excludes the …
This page has been updated with additional analysis since first publication. Inflation picks further, rates to stay high for some time The rise in Russian inflation to 7.7% y/y in February highlights that price pressures in the economy remain strong and …
13th March 2024
This page has been updated with additional analysis since first publication. Output to continue falling Euro-zone industrial production fell in January and is likely to continue contracting in the coming months due to weak demand. The 3.2% m/m decrease in …
This page has been updated with additional analysis since first publication. UK economy has probably already exited recession Note: We will be discussing whether the next government will move the dial on the economy in a 20-minute online briefing at 3pm …
Second hot core CPI print could put June rate cut at risk The second consecutive 0.4% m/m increase in core CPI in February leaves Fed officials some way from attaining the “greater confidence” needed to begin cutting interest rates. The annual rate of …
12th March 2024
Core inflation strength will worry Copom The Brazilian inflation data for February, which showed that the headline rate held steady at 4.5%, provided further evidence that underlying inflation pressures remain strong. This supports our view that interest …
This page has been updated with additional analysis since first publication. Slow grind back to 4% Headline consumer price inflation held steady at 5.1% y/y in February and looking ahead, we think it will take a few more months before it reaches the RBI’s …
More marked easing in wage growth is just around the corner We will be discussing whether the next government will move the dial on the economy in a 20-minute online briefing at 3pm GMT on Wednesday 13th March. (Register here .) The easing in wage growth …
Further easing in core inflation sets up Q2 rate cut February’s inflation data from Norway strengthen our conviction that Norges Bank will cut interest rates much sooner than its forecasts suggest. The decline in headline inflation from 5.3% in January to …
11th March 2024
Wobbly output won’t prevent BoJ from ending negative interest rates While the small rise in Q4 GDP should be followed by a renewed contraction this quarter, we doubt this will prevent the BoJ from ending negative interest rates by the of next month. The …
10th March 2024
Wage growth heading in the right direction The Bank of Canada will be relieved to see renewed labour market slack putting downward pressure on wage growth. While the Bank will need to see wage growth soften further before it pivots to rate cuts, we …
8th March 2024
Labour market conditions easing despite employment strength The 275,000 rise in non-farm payrolls in February may, at face value, add weight to the Fed’s view that there is no rush to start cutting interest rates, but the downward revisions to previous …
German Industrial Production (January) January increase but activity still weak The rise in Germany industrial production in January reverses only a fraction of the previous falls and does not change our view that the sector will struggle this year. The …
Imports set for stronger gain in first quarter The January trade data point to a potentially larger drag on first-quarter GDP growth than we had assumed, albeit mainly because imports look to have been stronger than previously believed. In nominal terms …
7th March 2024
Improvement in trade balance may not be a good thing Although the economy appears to have received a large boost from net trade at the start of 2024, the plunge in imports does not bode well for domestic demand and raises the risk that an inventory …
Lagarde likely to dash remaining hopes of April rate cut The ECB decision to leave rates unchanged and the key messages in the press release were in line with expectations. In the forthcoming press conference we suspect that Christine Lagarde will kill …
Inflation drops, Banxico on course for rate cut this month The drop back in Mexico’s headline inflation rate to 4.4% y/y in February, alongside the weakness of the latest activity data, leaves Banxico on course to cut interest rates at its next Board …
Rates on hold throughout 2024 Bank Negara Malaysia (BNM) left its overnight policy rate on hold (at 3.0%) today, and hinted in its statement that it was in little rush to change interest rates any time soon. This supports our view that the policy rate …
End of mortgage rate fall slows prices The smallest month-on-month increase in house prices since September suggested that the boost to house prices from the decline in mortgage rates since last summer is over. With mortgage rates now edging up, house …
Export volumes hit record high China’s export values rose y/y at the fastest rate since May, with export volumes reaching a record high. We doubt the sustainability of this strength, however, since exporters now have more limited scope to reduce prices to …
This page has been updated with additional analysis since first publication. Regular wage growth will receive a boost in Q2 While the jump in overall wage growth in January was entirely driven by volatile bonus payments, regular wage growth will receive a …
6th March 2024
Bank gives little away The Bank of Canada gave little away about the potential timing of interest rate cuts today, although its communications suggest that the Bank is gaining greater confidence that inflation is moving in the right direction. We …
NBP keeps rates on hold, limited window for rate cuts this year The National Bank of Poland (NBP) left interest rates on hold again today, at 5.75%, and the scope for monetary easing this year looks relatively limited. We still think there is a …
Powell content to wait for more data Fed Chair Jerome Powell looks set to stick to his previous script in his testimony to Congress today and, assuming we are right that the January strength in core inflation will prove to be a blip, his remarks do not …
Mortgage rates back above 7% stifle demand recovery February’s mortgage applications data show rising mortgage rates put an end to what had been the start of a fairly promising recovery, following the low for applications in October 2023. We think this is …
Boost to the economy now comes ahead of a bigger drag after the election The net fiscal giveaway of £13.9bn (0.5% of GDP) in 2024/25 in the Budget may at the margin help lift the economy out of its mild recession before an election later this year. But a …
This page has been updated with additional analysis since first publication. Euro-zone sales rose but still weak January’s retail sales data are consistent with our view that the near-term outlook for consumption is poor. While retail sales edged up by …
Construction PMIs edge closer to expansionary territory The headline CIPS construction PMI rose to 49.7 in February, just under the no change level. The rise was driven by the housing component, with commercial activity edging back a touch. As interest …
We hosted a Drop-in following the announcement that can be viewed on demand here . Central Bank of Egypt shifts back towards orthodoxy The announcement minutes ago from the Central Bank of Egypt that it has devalued the pound and hiked interest rates by a …
This page has been updated with additional analysis since first publication. Subdued activity will pave the way for rate cuts Although GDP growth last quarter was in line with what the RBA had expected, the Bank will take comfort from the fact that …
5th March 2024
Survey shows little signs of growth or inflation acceleration The fall in the ISM services index to 52.6 in February, from 53.4, left our weighted composite index consistent with a stagnation in GDP in the first quarter. That said, with the survey …
Very modest growth in Q4, but 2024 should be better South Africa’s economy posted a measly 0.1% q/q increase in GDP in the final quarter of last year and the latest evidence points to a soft start to 2024 too. But we still think that, with the drags from …
Gulf non-oil sectors strengthen in Q1; Egypt’s economy knocked by Israel-Hamas spillovers February’s batch of PMIs from the Middle East and North Africa continued to show that the Gulf’s private non-oil sectors have started 2024 on a strong footing. But …
This page has been updated with additional analysis since first publication. Above 2% inflation will allow BoJ to end negative rates in April Inflation jumped to well above 2% in Tokyo in February and will remain around that level for a few months. …
4th March 2024
