The FOMC’s hawkish surprise earlier this week has allowed the dollar to break through the top of its post-2022 range, putting it firmly on the front foot going into 2025. (See Chart 1.) With the BoJ and the BoE both striking a more dovish tone, as most …
20th December 2024
W e are sticking to our forecast that the S&P 500 will end next year at 7,000 , despite its slump since this week’s FOMC meeting. That’s even though we think Fed policy will be a bit less accommodative than we had previously projected , and the risk of a …
Earlier this week we published our US Outlook . We expect the incoming Trump administration’s policies to have a mildly stagflationary impact on the economy. Assuming that Trump introduces tariffs and immigration curbs via executive action by the middle …
Is Putin moving closer to a compromise? A lot of headlines from President Putin’s annual year-end press conference have focused on suggestions that he’s willing to make compromises to end the war in Ukraine. But it also remains clear that the two sides …
Frosty atmosphere at the top Forty years on from his father famously resigning as Prime Minister following a solo walk through an Ottawa snowstorm, reports suggest Justin Trudeau is mulling the same decision after a tumultuous week within government. The …
Economies in Eastern Europe are struggling heading into 2025, and policymakers have limited scope to provide support. We think that stubborn inflation pressures and currency weakness will mean that interest rates are cut by less than other analysts …
Anatomy of a (self-inflicted) crisis Brazil this week was on the precipice of a crisis – if not in one already. The real continued to tumble, hitting a record low of 6.3/$ on Wednesday – down around 10% against the dollar since late October. 10-year local …
A look back at 2024 reveals that some of our forecasts were good and some were off. We were right to forecast this time last year that Bank Rate would be cut only gradually, from the peak of 5.25% to 4.75%. (See here .) That turned out to be closer than …
Trump’s strange threat President-elect Trump’s warning to the EU to “…make up [its] tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!” will not cause sleepless nights in …
Real economy still strong; as price pressures ease again The 0.11% m/m increase in core PCE prices in November was the smallest gain in six months, although it follows on the heels of two above-target ~0.25% gains in the preceding two months. That …
Nigeria: more rate hikes not a done deal Nigeria’s headline inflation rate crept up further in November, but we’re not convinced that this will prompt the central bank to deliver more rate hikes. Figures released on Monday showed that Nigeria’s headline …
Markets don’t believe easing will deliver China’s central bank is trapped between the leadership’s incompatible desires to ramp-up monetary support for the economy, while keeping the currency stable and at the same time sending a message that its policy …
Plus, a dramatic plunge in the value of Brazil’s real shows how far investors have fallen out with Lula’s spendthrift administration. In an exclusive clip from our client briefing on Brazil’s crisis, William Jackson, Jason Tuvey and Jonas Goltermann …
Germany took a further step towards early elections this week as Chancellor Olaf Scholz intentionally lost a confidence vote in parliament as expected. Most political parties also published their manifestos. The main economic proposals of the CDU , which …
China’s exports of the “New Three” held up in November, although this was solely due to the strength of lithium-ion battery exports to the US as firms prepare for the imposition of tariffs. Looking ahead, alongside gains in competitiveness, tariff …
A rare dovish surprise from the CBR The unexpected decision by Russia’s central bank to leave interest rates on hold at 21.00% today, rather than hike further, sparks a lot of questions about the central bank’s reaction function – and whether it may be …
Consumption losing momentum again Retail sales volumes were unchanged in October, bringing a run of strong consecutive monthly gains to an end. Moreover, the preliminary estimate that sales values were unchanged in November too suggests this may be the …
When matters less than how far Governor Ueda delivered two messages in the press conference after yesterday’s policy meeting : first, the Bank of Japan thinks that policy normalisation is still on track and it intends to raise rates further; second, the …
RBA shake up The week began with Australian Treasurer Jim Chalmers announcing two new picks for the RBA’s monetary policy committee. To recap, in late November, parliament approved an overhaul of the RBA, in line with the recommendations of a review …
Dovish BoK minutes point to further rate cuts This week’s publication of the minutes from the Bank of Korea’s November meeting , at which it cut rates for a second month in a row, confirmed that inflation concerns have now largely subsided and that the …
Better data at the end of the year India’s economy is ending 2024 looking a little healthier than it had been. The flash editions of the manufacturing and the services PMIs both rose in the December readings that were published this week. (See Chart 1.) …
This page has been updated with additional analysis since first publication. Little festive cheer for retailers The 0.2% m/m rebound in retail sales volumes in November was slightly worse than expected (consensus +0.5% m/m) and leaves sales on course to …
This page has been updated with additional analysis since first publication. Some good news, but extra revenue-raising measures may still be required Christmas has come early for the Chancellor with borrowing undershooting expectations in November. But …
We expect there will continue to be major divergence between the winning and losing metros. We think the major markets and tech-centric western markets will continue to fare poorly thanks to low office attendance rates and relatively weak office job …
19th December 2024
2025 is promising to be an eventful one for Europe’s economies, with Germans preparing to head to the polls, France preparing for the next lurches in its political/debt crisis, and Donald Trump preparing to reoccupy the White House. At the same time, the …
Banxico cuts, but pace of easing unlikely to be stepped up Mexico’s central bank unanimously decided to deliver another 25bp interest rate cut, to 10.00%, at today’s meeting and the statement flagged that the easing cycle will continue in the coming …
Home sales finally gain some momentum The increase in existing home sales in November, despite rising mortgage rates and weakening mortgage applications the month before, points to stronger demand from cash buyers, possibly driven by investors as election …
Overview – We expect the incoming Trump administration’s policies to have a mildly stagflationary impact on the economy. Assuming that Trump introduces tariffs and immigration curbs via executive action by the middle of next year, we would expect GDP …
Saudi inflation to fall back over 2025 Saudi inflation rose further in November but there were tentative signs that some of the recent drivers of higher price pressures are fading and we expect the headline rate to drop back towards 1% by end-2025. The …
Tab le of Key Forecasts Overview – Headwinds to growth will remain strong in 2025 and our forecasts lie below the consensus. While more protectionist US trade policy will hit China and Mexico, the impact for most is likely to be limited. Currencies will …
While the Bank of England left interest rates at 4.75% today, it struck a slightly more dovish tone. This supports our view that the next 25 basis points (bps) rate cut will come in February and that the Bank will cut rates further and faster than …
Donald Trump’s policies will be a net drag on US GDP growth over the next couple of years, but we doubt that his re-election will prevent the US from remaining the world’s pre-eminent global economy over the coming decades. That said, economic strength is …
Easing on pause as the neutral level approaches The Czech central bank (CNB) left its policy rate on hold at 4.00% today, but we think that the easing cycle will resume before long. We still expect rates to fall towards 3.00% by the end of next year. …
The non-euro-zone central European logistics markets have been Europe’s worst performing in 2024 as prime rents have fallen across the region. 2025 will herald more of the same, as oversupply keeps prime rent performance lagging the rest of Europe, with …
For our more detailed analysis of the Bank's December policy announcement, see here . Dovish hold supports our view that rates will be cut further and faster than market pricing While the Bank of England left interest rates at 4.75% today, it struck a …
The fiscal loosening announced in October’s Budget means inflation and gilt yields are now set to be higher than previously expected over the next few years. That will limit yield compression, and the commercial property recovery will therefore be weak by …
Table of Key Forecasts Global Overview – We expect 2025 to be another year of reasonably healthy global GDP growth and a continued normalisation of monetary policy. To the extent that tariffs hurt the global economy, the damage will be less than …
We think 2025 will be a better year for the Japanese yen against the US dollar than 2024 has been, as the relative monetary policy picture shifts more decisively in its favour. A Fed cut and a hold from the Bank of Japan (BoJ) might seem like a surprising …
The economy should post decent growth in Q4 off the back of more forceful fiscal support. The leadership signalled following the recent Central Economic Work Conference that policy will be loosened next year which should continue to prop up activity. But …
The Bank of Japan's decision to leave rates on hold for a third consecutive meeting was not a great surprise. But in the post-meeting press conference Governor Ueda sounded in no hurry at all to resume the tightening cycle and there’s now a good chance …
The Riksbank’s decision to cut its policy rate by 25bp to 2.5% was widely anticipated and we expect it to cut just one last time next year, by 25bp in March. In contrast, Norges Bank left its policy rate unchanged today at 4.5% and is unlikely to start …
Saudi Arabia’s constrained approach to oil policy is here to stay until April and, coupled with the turn to fiscal consolidation, means growth will pick up by less than others expect in 2025. The final estimate of Saudi GDP showed that the pace of …
Surge in headline inflation won’t last, but underlying inflation to remain near target November’s surge in inflation wasn’t a surprise – the Bank of Japan will have known it was on the cards when it decided not to hike rates yesterday. But it should add …
Riksbank slows pace of cuts, likely to pause loosening at next meeting The Riksbank cut its policy rate by just 25bp today to 2.5% and it is unlikely to cut at its next meeting in January. Further ahead, we now expect just one more 25bp cut next year, in …
Taiwan’s central bank (CBC) left its main policy rate unchanged today (at 2.0%) and with risks to the inflation outlook skewed firmly to the upside we expect rates to remain on hold throughout 2025. In contrast, the consensus is expecting the central bank …
Low inflation in the Philippines to prompt further rate cuts The central bank in the Philippines (BSP) today cut rates by 25bps (to 5.75%) for the third consecutive meeting and signalled that more rate cuts of the same magnitude are likely over the …
Bank will bring in the new year with a rate hike Although the Bank of Japan left rates on hold for a third consecutive meeting, we think it will resume its tightening cycle before long. The Bank’s decision to leave the policy rate unchanged at 0.25% was …
This page has been updated with additional analysis since first publication. Cratering activity bolsters the case for aggressive easing With activity in freefall, we expect the RBNZ to keep cutting rates aggressively over the year ahead. The 1.0% q/q fall …
18th December 2024
The Fed did cut interest rates by an additional 25bp today, as was largely expected, taking the fed funds rate down to between 4.25% and 4.50%. But the vote was not unanimous and, in a hawkish shift, the new median projection now shows only 50bp of …
