Today’s decision by Norges Bank to hike its policy rate by 25bp to 4.50% marks the end of its tightening cycle. Looking ahead, we have pencilled in a faster pace of rate cuts next year than policymakers currently anticipate as we expect a weak economy and …
14th December 2023
Today’s SNB decision and statement were largely in line with expectations as the policy rate was held at 1.75% and policymakers removed any mention of FX sales. We think the latter decision signals that loosening is imminent and will probably first …
The target from COP28 to triple global renewable generating capacity this decade is encouragingly ambitious. But as our Climate Reporting Tools show, the goal will be easier to achieve in some countries than others, and attention will also be needed on …
Rise in inflation likely to be short lived Saudi Arabia’s headline inflation rate rose a touch, from 1.6% y/y in October to 1.7% y/y in November (see Chart 1), which is still low by the standards of the past two years. And we think disinflation will …
Tightening cycle comes to an end Today’s decision by Norges Bank to hike its policy rate by 25bp to 4.50% marks the end of its tightening cycle. Looking ahead, we have pencilled in a faster pace of rate cuts next year than policymakers currently …
SNB leaves rates unchanged, but policy loosening is imminent The SNB kept rates on hold at 1.75% at today’s policy meeting, but the monetary policy statement was dovish as policymakers placed less emphasis on selling FX assets and reduced their inflation …
The most immediate impact of South Africa’s pension reform, due in September 2024, is that contributors will be allowed early access to some of their retirement savings, which could provide a near-term lift to consumption. Similar measures introduced in …
Taiwan’s central bank (CBC) left its policy rate unchanged again today, but with economic growth set to slow sharply and inflation on its way down, we expect the CBC to start cutting rates from June. The decision to leave the policy rate unchanged, at …
Heading in the right direction The larger-than-expected fall in all the main measures of Swedish inflation in November will not prompt the Riksbank to cut interest rates at its next meeting but it does make us more confident in our call that rate cuts …
Rates on hold, cuts coming sooner than most expect The central bank in the Philippines (BSP) today left its main policy rate unchanged (at 6.50%), and hinted that it would be necessary to keep monetary conditions tight for the foreseeable future. …
GDP growth should rebound modestly in the fourth quarter but we expect it will remain soft in 2024. Meanwhile, weak job openings data suggests the labour market should loosen slightly in the short term. However, there are mounting signs that a virtuous …
This page has been updated with additional analysis since first publication Labour market will continue to loosen Even though employment growth remains strong, job creation isn’t fast enough to absorb the surge in the labour force. Accordingly, we expect …
This page has been updated with additional analysis since first publication. Domestic demand to remain weak The rise in “core” machinery orders in October is a sign that business investment may rebound in Q4 after falls in q/q terms in both Q2 and Q3. In …
13th December 2023
Falling mortgage rates breathe life back into the market Declining mortgage rates have already generated a significant improvement in demand, with the new buyer enquiries and sales expectations balances recording their strongest readings for over a year …
This page has been updated with additional analysis since first publication A double-dip recession is back in play Output slumped anew in Q3, and we suspect it remained in contractionary territory this quarter as well. Accordingly, we think the RBNZ will …
Copom sticking to 50bp cuts The statement accompanying the Brazilian central bank’s decision to lower the Selic rate by 50bp, to 11.75%, was slightly more dovish than the last one from November. But not enough has changed to make policymakers consider …
The Fed’s reluctance to acknowledge that it will need to begin cutting its policy rate soon – to prevent a run-up in real rates – was predictable enough based on its intransigence ahead of previous turning points in the policy cycle. We continue to expect …
Stubborn Fed demonstrates the SEP’s shortcomings The Fed’s reluctance to acknowledge that it will need to begin cutting its policy rate soon – to prevent a run-up in real rates – was predictable enough based on its intransigence ahead of previous turning …
Investors have revised down their expectations for the Fed funds rate a long way in recent weeks. But we think that shift will continue in the coming months, pushing Treasury yields down further. With a broad consensus that the FOMC will leave the Fed …
India’s economy has grown at a healthy clip over recent quarters and, with the help of government spending, we think it will continue to hold up well ahead of next year’s general election. Given also that food inflation has picked up again, the RBI will …
Table of Key Forecasts Global Overview – We think that global growth will undershoot consensus expectations in 2024 as the lagged effects of monetary policy tightening filter through. Among the advanced economies, the US will continue to outperform …
Falls in financial market interest rate expectations mean that mortgage rates will drop to a six-month low in December. That will support a further recovery in housing market activity in the near term. But, if we are right to think the Bank of England …
The US dollar has reversed around half of the gains it made from mid-July to end-October amid a sharp fall in US Treasury yields and a general compression of risk premia across markets, leaving the greenback, in aggregate, roughly where it started the …
The front runner in Taiwan’s election, Lai Ching-te, is targeting economic growth of 3.5% if he wins the presidency. We think this will be out of reach. Although productivity growth should hold up well, the rapidly worsening demographic outlook means that …
The economic reform measures announced yesterday by Argentina’s Economy Minister Luis Caputo, including a large devaluation of the peso and fiscal tightening, mark a clear change in policymaking from the previous Peronist administration. But this wasn’t …
Overview – Economic growth in the Middle East and North Africa will strengthen a little in 2024 but is likely to come in well below consensus expectations. OPEC+’s cautious approach to oil policy will keep a lid on economic growth in the Gulf over the …
Broad based weakness signals a weak end to 2024 September’s activity data for South Africa suggest that economy continued to struggle at the start of Q4. But we think that a combination of easing electricity outages and less restrictive fiscal policy will …
This page has been updated with additional analysis since first publication . A smaller-than-expected acceleration Broad credit growth continued to rise in November thanks to a pick-up in government bond issuance, but it still came in below expectations. …
The detailed mortgage lending data for Q3 show that the high cost of borrowing has continued to price many out of the market and made new BTL investment unattractive. But while arrears are rising, they are not translating into repossessions so we still …
Inflation drops back, but SARB to remain hawkish as core rate rises South Africa’s headline inflation rate dropped back to a slightly lower-than-expected 5.5% y/y in November, but the fresh rise in core inflation reinforces our view that the Reserve Bank …
Economy slowing at the start of Q4 The further softening in Turkish retail sales and industrial production growth in October suggests that the slowdown in the economy continued at the start of Q4. We think it’s possible that GDP contracts outright this …
Contraction in October sets scene for stagnation in 2024 Note: We’ll be discussing the Fed, ECB and Bank of England December decisions and the policy outlook for 2024 in an online briefing on Thursday, 14 th December . Click here to register for the …
Today’s budget update showed that the government now expects a balanced budget in 2023/24, as opposed to the modest deficit it had projected a few months ago. With revenue likely to outperform the government’s conservative assumptions, we think an …
Overview – We suspect that both economies will narrowly avoid a recession but a prolonged period of below-trend growth will reduce price pressures and allow central banks to ease monetary policy again. We’ve pencilled in rate cuts in Australia in Q2 and …
This page has been updated with additional analysis since first publication. Strong Tankan suggests Japan won’t slip into recession The continued improvement in the Tankan suggests that the drop in Q3 GDP was just a blip, but we still expect GDP growth …
12th December 2023
Inflation is slowing and domestic demand is weakening However, price pressures are increasingly broad-based and wage growth is accelerating Bank’s leadership signalling that end of negative rates isn’t far off The Bank of Japan is increasingly keen to …
While US inflation for November was almost exactly as the analysts’ consensus had predicted, the yields of long-dated government bonds still rose a bit on the news in most places. But we continue to think that yields will generally fall over the next year …
The US dollar and the prices of major commodities, in aggregate, have often risen and fallen in tandem since 2021, in contrast to their strong inverse relationship for much of the past two decades. While we wouldn’t go as far as classifying the greenback …
Table of Key Forecasts Overview – Aggregate EM GDP growth will enter a slower phase over the coming quarters. But the headline figure masks an unusually large variation in prospects at a country level. Many of the EMs that fared surprisingly well in 2023, …
Overview – The euro-zone will remain in or close to recession in the first half of 2024 as the effects of higher interest rates continue to weigh on household consumption and investment, and fiscal policy is tightened. Headline inflation has already …
This page has been updated with additional analysis since first publication. Stronger rise in core prices buys Fed a little more time The slightly stronger 0.28% m/m rise in core consumer prices in November suggests the Fed may be able to hang onto its …
This page has been updated with additional analysis since first publication. Elevated food inflation suggests no chance of imminent loosening Headline consumer price inflation rose to a three-month high of 5.6% y/y in November amid a renewed rise in food …
This page has been updated with additional analysis since first publication . Another 50bp rate cut on the cards tomorrow The small fall in Brazil’s headline inflation rate in November, to 4.7% y/y, makes another 50bp interest rate cut (to 11.75%) at …
This page has been updated with additional analysis since first publication. Sharp fall in wage growth will further fuel market rate cut expectations The sharp fall in wage growth in October will probably further fuel investors’ expectations that interest …
“Safe” and “risky” assets are both on track for a strong final quarter of the year, and we think next year will deliver more of the same. After all, we think that the main tailwind this quarter – growing expectations that central banks will cut interest …
11th December 2023
The resurgence in the labour force over the past year mainly reflects the ongoing boost to participation from increasing opportunities for women to combine parenthood with work, more young people choosing jobs over college, and a continued decline in …
While the gold price has retreated over the past week or so, we think it is set for a renewed rally next year as the Fed cuts interest rates and long-term real yields fall back further. After a strong run over recent months, the gold price has dropped …
We think the rally in developed market (DM) government bonds will continue for a while yet, as some major central banks, including the Fed, ultimately cut by more than investors seem to expect. But we anticipate that yields will generally settle at much …
