Will high inflation or weak growth win out? Brazil’s central bank is all but certain to follow through with a clearly-signalled 100bp hike in the Selic rate to 14.25% next week, so all attention will be on the statement: whether it includes forward …
14th March 2025
Trump torments Tiff The Bank of Canada’s decision to lower its policy rate by a further 25bp, to 2.75%, at its meeting on Wednesday was largely expected given the growing downside risks to the economy from US tariffs. While the temporary carveout …
Tariffs drive divergence in metals price outlook The price premium for industrial metals in the US surged in anticipation of the 25% tariffs on steel and aluminum, which were implemented this week. For example, the Midwest premium for aluminum has jumped …
What Trump put? Investors had until recently been relatively sanguine about the economic and financial market risks posed by President Donald Trump’s more extreme policy inclinations. His cabinet lacks the establishment types that served as a check on …
Bond market investors don’t seem to believe that monetary policy will be eased any further in China. Two-year yields have risen from 1.0% to 1.5% since the start of the year, putting them into line with overnight rates. They are higher now than they were …
Ceasefire proposal met with resistance by Putin The US proposal for a 30-day ceasefire in Ukraine has been met with a mixed response in Russia, with President Putin saying that he “supports the idea” but that it needs “serious reworking”. The ceasefire …
Policy concerns weigh heavily on sentiment The plunge in the University of Michigan Consumer Sentiment Index in March, paired with the surge in inflation expectations, indicates that consumers’ concerns about the impact of the Trump administration’s …
Strong start to the year not a sign of things to come The large rises in both manufacturing and wholesale sales volumes at the start of the year suggest that GDP may have done even better than the flash estimate of a 0.3% m/m rise in January, although …
Europe’s plans to increase its defence expenditure are still evolving but based on what we know so far, we estimate that it will rise by around 0.5% of GDP between 2024 and 2026 for the euro-zone as a whole, lifting GDP by 0.2-0.3% over two years. The …
Duterte arrest puts political instability in spotlight The arrest this week of former Philippine president Rodrigo Duterte by the International Criminal Court for his role in extra-judicial killings of over 6,000 suspected drug dealers has no direct …
Key risks: food prices, banks, tariffs This week we published our Q2 India Economic Outlook , which contains all of our latest analysis of India’s economy and financial markets (the forecasts and underlying data can also be viewed in our interactive India …
The yen shrugged off the results of Japan’s “Shunto” spring wage negotiations today, even though the unions’ demands for another year of strong wage growth were broadly agreed to by firms. That’s not too surprising: it’s been clear for some time that …
Broad credit growth picks up, but private demand still weak While bank loan growth continued to slow to record lows in February, that was more than offset by stronger growth in non-bank credit. Strong government bond issuance should continue to provide a …
Shunto results in largest pay hikes since 1991 Japan’s Trade Union Confederation (RENGO) today released the first round of results of this year’s spring wage negotiations (Shunto). Including seniority pay hikes, RENGO’s preliminary tally showed a 5.46% …
The 0.1% m/m fall in real GDP in January (consensus +0.1%, CE -0.2%) highlights the weakness of the economy before the full effects of the rise in business taxes and the uncertain global backdrop is felt. Only a small part of the fall in GDP in January …
There are good reasons for the BoJ to strip out only fresh food rather than all food from its preferred measure of core inflation. To be sure, the fact that inflation excluding all food and energy has fallen to just 1.6% underlines that price pressures …
Budget deficit not widening as much as feared Treasurer Jim Chalmers will hand down the 2025/26 Budget on 25 th March and he will be eager to share the good news that the budget deficit in 2024/25 will be smaller than the Treasury had predicted in the …
The surge in rental demand is over, but rental demand will probably remain stronger than pre-pandemic levels. That suggests the prop to rents growth in 2025 and 2026 from solid demand will fade only slowly. Fundamentally, changes in rental demand are …
13th March 2025
While today's US PPI print supports our view that the Fed will stand pat this year, comments from central bankers in Canada and Japan suggest they may have different views about how over how to respond to the impact of US tariffs on domestic inflation and …
We expect the SNB to cut its policy rate by 25bp next week to take it to 0.25% in response to the very low inflation rate early this year. But we think that will be the last cut of the cycle, as underlying price pressures have not been as weak as we …
Overview – Our new forecasts have been compiled in the most uncertain geoeconomic environment for a long time. But our firmly below-consensus expectations for US CRE are led by our view that nearly three years since the market peak, appraisals still do …
Consecutive interest rate cuts unlikely Vote may again make the MPC look more dovish than it really is Even so, rates may eventually be cut to 3.50% rather than to the low of 4.00% investors expect The Bank of England will almost certainly leave interest …
Egypt is now twelve months into its orthodox policy shift and, so far, the authorities have moved in the right direction towards restoring macro stability. But there is still work to do in the next phase of reforms that is needed to unlock stronger GDP …
The vote on Brazil’s 2025 budget (likely next week) will put renewed attention on whether the primary deficit will be kept low enough to comply with the government’s fiscal rules. But the key point is that Brazil’s weak public debt dynamics owe more to …
The strong inflation data so far this year supports our view that the Riksbank has already ended its loosening cycle and will keep its policy rate at 2.25% next week. And we expect the policy statement to focus much more on the upside risks to inflation …
CPI & PPI point to 0.35% m/m increase in core PCE While final demand and core PPI both surprised to the downside in February, the price increases in the components which matter for the PCE deflator were on the whole hotter than we had anticipated. As a …
Middle East & North Africa Chart Pack (Mar. '25) …
For all the focus on a possible ‘Trumpcession’ and the related risks to US oil demand, it is worth noting that oil demand growth is already anaemic and our view on the US economy is consistent with demand stagnating or contracting slightly in 2025. While …
The rise in defence spending that looks likely in many countries over the next few years will boost demand and output, albeit by less than the headline-grabbing figures might suggest. Meanwhile, higher defence spending could give a significant boost to …
Our Bank of England MPC Monitor helps track whether the Bank is becoming more inclined to cut interest rates faster and further or slower and not as far. This dashboard was last updated on 17th April 2025. If you have subscriber access to the data …
This page has been updated with additional analysis since first publication. Outlook weak despite prospect of higher defence spending The increase in euro-zone industrial production in January does not change the fact that output remains well below its …
Our Interactive Markets Chart Pack gives you a comprehensive and timely view of the latest developments in financial markets, and how we expect them to perform in 2025 and beyond. The Chart Pack can be downloaded in PDF form using the Download button on …
Weak economy finally taking its toll on housing demand February’s RICS survey suggests the downside risks to our 2025 forecasts for housing demand and prices from the weak economy continue to grow. But bigger falls in mortgage rates than most expect over …
It’s little surprise that inflation data for February hardly moved the dial for the US stock market – that probably requires clarity on trade policy and signs of economic resilience. Our base case is that both of these will come in the coming months (even …
12th March 2025
The policy turnarounds that have continued in Argentina, Egypt, Nigeria and Turkey have led to a sharp reduction in sovereign risk premia but have had mixed success in restoring macroeconomic stability so far. We remain most optimistic on the outlook for …
Although the Bank of Canada cut interest rates by 25bp again today, it also warned that “monetary policy cannot offset the impacts of a trade war” and that it must guard against tariff-related rises in price inflation. This suggests that the Bank is …
South Africa’s 2025 Budget speech was (finally) delivered but it’s not at all clear whether the plans will be approved given the DA’s opposition to the proposed VAT hike. We think there is more horse trading to be done, with Finance Minister Godongwana …
NBP on hold, talk of rate cuts in H2 may be premature The decision by the National Bank of Poland (NBP) to leave its policy rate on hold today, at 5.75%, was widely anticipated, but we think that interest rates will stay higher than most others expect …
Powell not yet concerned by signs of weak first-quarter GDP growth Still too hot inflation and rising inflation expectations will concern the Fed But new economic projections will probably still point to some loosening this year Comments from Chair Jerome …
Bank cuts again but warns that it must protect against tariff-induced inflation Although the Bank of Canada cut interest rates by 25bp again today, it also warned that “monetary policy cannot offset the impacts of a trade war” and that it must guard …
Not as good as it looks The softer 0.23% m/m rise in core CPI in February is not as encouraging at it looks, as the components which feed into the Fed’s preferred PCE price index rose more sharply. While it will depend a lot on the PPI data tomorrow, our …
Inflation jump keeps door open for more rate hikes The sharp rise in Brazilian inflation to 5.1% y/y in February is likely to be followed by further increases in the coming months. Our base case is that next week’s Copom meeting will see the final (100bp) …
Events of the past week or so have worsened the outlook for German commercial property. While more government spending could marginally boost rents, the higher outlook for interest rates will outweigh this positive, and will likely put upward pressure on …
Kenya’s 2025/26 budget has set out ambitious revenue-raising plans that we think will be tough to achieve and some fiscal slippage is inevitable. The result is that, in the absence of further fiscal consolidation efforts, Kenya’s public debt-to-GDP ratio …
Further easing in inflation leaves door open to more rate cuts The larger-than-expected fall in Indian headline consumer price inflation to below the RBI’s 4% target in February supports our view that the central bank will continue to loosen monetary …
