Norges Bank at risk of falling behind the curve Norges Bank’s decision to leave its policy rate unchanged at 4.5% was never in doubt. We still suspect that continued declines in inflation will allow it to start cutting before the end of the year, which …
15th August 2024
Inflation likely to ease as 2025 approaches Saudi Arabia’s headline inflation rate was unchanged at 1.5% y/y in July, but we expect that the headline rate will ease back over the remainder of this year and potentially fall back below 1% y/y by early 2025. …
BSP cuts rates, more easing to come The central bank in the Philippines (BSP) kicked off its easing cycle today with a 25bps cut (to 6.25%), and hinted that further easing was likely over the coming months. With inflation set to drop back further and …
Swiss economic growth returns to trend rate Switzerland’s sporting event-adjusted GDP growth accelerated to 0.5% q/q in Q2, its fastest pace in over a year and slightly above our forecast of 0.4%. At the margin this may give the SNB some caution against …
This page has been updated with additional analysis since first publication. Strength in Q2 won’t last While the economy flatlined in June, it still managed to grow by 0.6% q/q rise in GDP in Q2. That said, some of the rebound in activity in Q2 may have …
Our Australia & New Zealand Chart Pack has been updated with the latest data and our analysis of recent developments. The Antipodean central banks will tread different paths when it comes to policy setting in the near term. With the New Zealand economy …
Deceleration eases with growth nearing turning point After slowing in Q2, economic momentum appears to have stabilised somewhat last month, with a pick-up in consumer spending and services activity largely offsetting a slowdown in investment and …
This page has been updated with additional analysis since first publication. Labour force continues to absorb surge in workers The slight uptick in the unemployment rate last month belies a renewed acceleration in employment growth. Accordingly, the data …
Strong rebound in consumption points to further monetary tightening The strong rebound in GDP last quarter was driven by the first rise in consumption in more than a year and should encourage the Bank of Japan to press ahead with another rate hike later …
The muted reaction to today’s US CPI data reflects that most investors already expected inflation to fall to around 2% before long and remain there. But last week’s turmoil highlighted that when everyone is banking on one outcome – in this case, inflation …
14th August 2024
Since the Riksbank’s last meeting in June, Swedish inflation and activity data have been weaker than policymakers expected. We think this will encourage them to cut the key policy rate from 3.75% to 3.5% next week and to indicate at least a further 50bp …
While investment has tentatively turned a corner, subdued activity and further rises in cap rates mean 2024 will still be a tough year. All-property values are down by 18% from their mid-2022 peaks, but we expect the eventual peak-to-trough decline to …
The renewed widening of global imbalances has become another faultline in the fracturing of the world economy, and will continue to provoke trade barriers in the coming decades. With overall imbalances most prominent in the US, further tariffs aimed at …
CPI consistent with a 25bp rate cut rather than 50bp The 0.15% m/m increase in all-items CPI and the 0.17% increase in core CPI in July suggest that, after the temporary relapse in the first quarter, the disinflationary trend has firmly reasserted …
South African economy looks to have recorded a pick-up in growth in Q2, but the recovery is operating at two speeds with retail sales and manufacturing on the up, while the mining sector remains a weak spot. Nonetheless, with easing electricity shortages …
Jordan’s economy has been among the hardest hit from the indirect spillovers of the war in Gaza. While severe balance of payments of strains are likely to be avoided, GDP growth will suffer as the key tourism sector has taken the brunt of the impact. And …
Thailand's Constitutional Court today dismissed Prime Minister Srettha Thavisin, a move that could trigger further political instability and bodes poorly for the country’s economy. Srettha, a real estate mogul, becomes the fourth Thai prime minister in 16 …
Commercial property investment is on track to hit our forecast for a rise of 20% this year, helped by a substantial rise in retail transactions. A decent rental growth outlook coupled with attractive valuations, particularly for shopping centres, is …
Euro-zone growth likely to remain weak Data released today confirmed that the euro-zone economy expanded by 0.3% q/q in Q2, but surveys published for July suggest that it may be slowing again. The second estimate of euro-zone GDP in Q2 was unchanged from …
Prime Minister Kishida’s resignation is hardly a surprise. At this stage, it’s very difficult to predict who will succeed him and the ruling LDP will probably remain in power for the foreseeable future. The upshot is that Kishida’s withdrawal doesn’t have …
Strong second quarter will dampen expectations for rate cuts The larger-than-expected pick-up in Polish GDP growth in Q2, to 1.5% q/q (from 0.8% in Q1), suggests that the risks to our forecast for GDP to expand by 3% over the year as a whole are now …
This page has been updated with additional analysis since first publication. Soft surprise opens the door to more interest rate cuts later this year The smaller-than-expected rise in CPI inflation from 2.0% in June to 2.2% in July (consensus forecast …
The RBNZ began its easing cycle with a 25bp rate cut at its meeting today. Although the Bank appeared to strike a cautious tone about further policy easing, we think it will cut rates more aggressively than many are anticipating. We were among the 12 …
RBNZ will loosen policy aggressively The RBNZ began its easing cycle with a 25bp rate cut at its meeting today. Although the Bank seemed to strike a cautious tone about further policy easing, we think it will cut rates more aggressively than many are …
The further rally in stock markets today leaves both valuations and earnings looking consistent with a “soft landing” in the US. So it would not take much for equities to struggle if the economy were to deteriorate – although that isn’t our base case. The …
13th August 2024
Housing inflation has become an increasingly important driver of core services inflation in Mexico – a key concern of the central bank, Banxico. And we think that robust household income growth and a lack of supply of dwellings will keep housing and, by …
Signs of a thaw in frosty relations between India and China don’t point to a fundamental realignment in India’s position in a fracturing global economy. But they highlight a growing theme of some EMs tactically courting investment from China to put …
Muted PPI is more good data The muted 0.1% m/m increase in final demand PPI and unchanged core PPI for July is not quite as good as it looks, but it is nevertheless consistent with the Fed’s preferred core PCE prices measure increasing at a below-2% …
Credit growth starts to recover, private demand still weak Broad credit growth ticked up in July, while bank loan growth only slowed a touch. (See Chart 1.) We expect a continued acceleration in government bond issuance to support a further expansion of …
This page has been updated with additional analysis since first publication. Easing in wage growth clears path for more rate cuts later this year The further easing in wage growth will be welcomed by the Bank of England as a sign that labour market …
This page has been updated with additional analysis since first publication. Wage growth will cool in earnest The RBA probably won’t read too much into the fact that annual wage growth stalled last quarter. A gradual loosening of the labour market should …
While a big reduction in speculative positioning against the Japanese currency may mean that future moves in global financial markets will be less extreme than recent ones, it doesn’t preclude more turbulence if, e.g., this week’s US data disappoint. Much …
12th August 2024
Developments in Ukraine have once again emerged as a key driver of EU natural gas prices. But a combination of lower gas use and the sourcing of alternative supplies in Europe means that the situation is very different to that during the energy crisis. …
We are sceptical that the recent decline in mortgage rates will revive the housing market. Rates are still high compared to recent years, discouraging homeowners from moving, while most potential new buyers remain sidelined due to historically stretched …
This page has been updated with additional analysis since first publication. Disinflation back on track The drop in headline consumer price inflation to a one-year low in July should reassure the RBI that June’s surprise jump was a one-off and that the …
Container shipping costs have fallen back slightly in the past few weeks. And while the potential for further shipping disruptions makes the outlook for shipping costs highly uncertain, as things stand the rise in shipping costs this year is unlikely to …
European office occupier surveys reveal that office attendance and utilisation has continued to rise over the past year and that it could still improve a bit further. However, despite the rise in attendance, office vacancy has continued to climb and is …
The economic data have softened, corporate executives are sounding the alarm over slowing sales, and policymakers are signalling that they will provide more support to the economy. This is not the US but China. Yet mounting concerns about the growth …
Economy slows in Q2, but headline inflation rises further The slowdown in Russian GDP growth in Q2, to 4.0% y/y, suggests that the economy has lost a bit of momentum. But overheating pressures remain alive and the increase in inflation to 9.1% y/y in July …
9th August 2024
After a turbulent start to the week, financial markets have stabilised over recent days, with asset prices and risky currencies recovering some of their sharp falls in the wake of the run of poor US economic data that prompted a massive sell-off across …
With the Summary of Deliberations this week confirming that the Bank of Canada is putting more weight on the downside risks, we feel confident that the Bank will continue to cut interest rates at each remaining meeting this year. Still, with wage growth …
At Banxico’s meeting yesterday, worries over the weakness in the Mexican economy outweighed concerns over the sell-off in the Mexican peso and prompted the central bank to restart its easing cycle. Banxico’s disregard for the peso’s depreciation seems …
Economy still nowhere near recession In purely mechanical terms, the limited data released this week did trigger a downward revision to our third-quarter GDP growth forecast to 1.7%, from 2.0%. But only because the June trade data sets up for a slightly …
Our Asia team will be holding a Drop-In on Wednesday 14th August at 0830 ET/1330 BST to discuss the timing of Asian interest rate cuts and the impact of global markets volatility. Register here for the 20-minute online briefing. Weakening against a weak …
After stagnating in the first half of this year, the Halifax house price index jumped by 0.8% m/m in July in response to the fall in mortgage rates from 4.9% to 4.7% in July. (See here .) What’s more, July’s RICS survey suggests that increasing demand …
Concerns about a US recession have led to a sharp reassessment in financial markets; some of the shifts in the wake of the latest US non-farm payrolls report look overdone (and have to some extent reversed). Given that we still think a “soft landing” is …
