UK Economics Household incomes taking a big hit We estimate that the leap in utility prices and hike in taxes on 1 st April will reduce real household disposable incomes over the next two years by a cumulative £80bn. The resulting 2.0% decline in... 10th February 2022 · 8 mins read
Nordic & Swiss Economics Update Riksbank unlikely to buck the trend for much longer While the Riksbank largely stuck to its dovish stance this morning, the fact that three of the six members of the Executive Board entered reservations and favoured reducing the size of the balance... 10th February 2022 · 3 mins read
Nordic & Swiss Data Response Norway Consumer Prices (Jan.) Given the backdrop of a tightening labour market, the fall in CPI-ATE is likely to be a one-off. We think that once the latest wave dissipates, the core inflation rate will pick up again and may rise... 10th February 2022 · 2 mins read
Emerging Europe Data Response Russia Activity Data (Dec.) & Consumer Prices (Jan.) The latest data show that Russia’s economy grew strongly in December and that consumer price inflation rose to 8.7% y/y in January. The inflation reading was weaker than expected, but inflation looks... 9th February 2022 · 2 mins read
UK Economics Interest rates to peak at 2.0% We now think that Bank Rate will rise from 0.50% currently to 1.25% sooner than we previously thought. What’s more, we now expect three more 25 basis point rate rises in 2023, resulting in rates... 9th February 2022 · 7 mins read
Europe Economics Update Will ECB tightening cause a fresh crisis? Any policy tightening by the ECB in 2022-23 will probably be too limited to cause major problems in the bond market. But if interest rates rise much further than we anticipate, that could trigger... 9th February 2022 · 4 mins read
UK Commercial Property Valuation Monitor Valuations worsen as property yields continue to fall Property valuations, compared to bonds and equities, deteriorated for a fourth consecutive quarter in Q4. The spread between the asset classes narrowed as the magnitude of the fall in all-property... 9th February 2022 · 6 mins read
Europe Economics Update How big a problem are higher interest rates for Italy? Our base case is that monetary tightening by the ECB results in a manageable rise in Italy’s government bond yields. We think it would take 10-year yields rising to 5% or more to bring debt... 9th February 2022 · 4 mins read
Emerging Europe Economics Update NBR steps up the pace of tightening The National Bank of Romania (NBR) accelerated its tightening cycle today with a 50bp hike to its key policy rate (to 2.50%) and, with inflation firmly above the central bank’s target, we think this... 9th February 2022 · 2 mins read
Emerging Europe Economics Update NBP maintains steady tightening as inflation risks build The National Bank of Poland (NBP) raised its policy rate by another 50bp, to 2.75%, at today’s meeting and, while there was little change in language in the statement, we think a backdrop of strong... 8th February 2022 · 2 mins read
Europe Chart Pack Shift in ECB stance poses risks to the bond market Both we and the market are now discounting 100bp of ECB rate hikes by the end of 2023. And given the sequencing set out by Christine Lagarde, it seems likely that net asset purchases will end in Q3... 8th February 2022 · 12 mins read
Emerging Markets Economics Update What higher oil prices mean for EMs If oil prices were to remain at their elevated levels, they could push current account and budget balances into surplus in many of the EM producers. It would also ease any concerns about dollar pegs... 8th February 2022 · 3 mins read
UK Housing Market Data Response Halifax House Prices (Jan.) The smaller gain in house prices in January reported by Halifax is unlikely to mark the start of a sharp deceleration in house price growth. With the supply of homes for sale still very limited and... 7th February 2022 · 2 mins read
Europe Data Response German Industrial Production (December) The small decline in production in December was not quite as bad as it looks because it was largely due to a fall in construction activity, but 2021 was still a terrible year for German manufacturers... 7th February 2022 · 2 mins read
UK Housing Market Outlook House price gains have further to run It is likely to take longer than most expect for rising interest rates to cool the housing market. Mortgage rates have only just begun to rise from the record low reached in November, and limited... 4th February 2022 · 22 mins read
UK Economics Weekly Bank signals more hikes sooner rather than later The MPC's policy statement this week cements our view that interest rates will rise further from 0.50% now to 1.25% by the end of this year and perhaps a bit further in 2023. If anything, the MPC's... 4th February 2022 · 8 mins read
