It is very unusual for the Bank of England to be cutting interest rates when inflation is above the 2% target and is expected to rise further. There’s a growing risk, then, that inflation fears will force the Bank to stop cutting rates. Equally, though, …
27th February 2025
ESIs point to stronger growth, higher inflation The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) suggest that regional growth may hold up a little better than we had been expecting in Q1. That said, firms’ …
EC survey points to a weak economy but sticky inflation Surveys so far this year, including today’s EC survey for February, suggest the economy remains very weak while inflationary pressures are still somewhat elevated. While the ESI did increase in …
The sharp falls in cryptocurrency prices in recent days highlight why cryptocurrencies including Bitcoin remain unlikely to take over from established fiat currencies or usurp gold as the preferred store of value. Even if prices were to fall more sharply, …
Despite growing concerns that tech stocks are "priced for perfection", and the ongoing threat of tariffs, we still expect the S&P 500 to rally over the remainder of this year. The muted after-hours reaction in Nvidia’s share price to yet another stellar …
Policy support is helping developers secure financing and should boost their sales this year. This will allow them to intensify work on existing projects. But it won’t prevent homebuilding activity from declining further over the coming years as the …
Bank Indonesia now owns a larger share of government bonds than some DM central banks did at the height of their pandemic QE programmes. Amidst worries that the fiscal guardrails are coming off, BI’s continued bond purchases could create the impression …
The greenback has struggled over the past month or so, since President Trump took office. However, we think that a sustained fall in the dollar like that at the start of his first term remains unlikely. While the dollar has rebounded a bit today, it has …
26th February 2025
Harsh winter weather takes its toll on buyers The large fall in new home sales in January was to be expected given the disruption from the unseasonably severe winter weather. While sales should rebound this month, elevated mortgage rates will limit the …
Argentina’s President Javier Milei has pledged to remove capital controls but we think that a major change in Argentina’s exchange rate setting before the mid-term elections in October is unlikely. And even then, our sense is that the removal of capital …
This Update answers some key questions on the recently agreed US-Ukraine minerals deal. In short, estimates of Ukraine’s mineral wealth seem to be overblown and the deal suggests that US support for Ukraine under Trump is likely to come with strings …
Asia Chart Pack (February 2025) …
The acceleration in house price growth in January suggests the housing market has maintained momentum as the wider economy is losing it. What’s more, our forecast for mortgage rates to fall further than is widely anticipated suggests the market will …
Qatar’s economy will be stuck in the slow lane for much of 2025 as non-hydrocarbon activity slows and LNG output remains constrained. But the North Field will start to come online from Q4 and provide a sizeable boost to growth, which is likely to reach …
Commodities are trading in a hyperkinetic news cycle, with Donald Trump raising tariffs on US allies, China calibrating a response to ever-harsher punitive trade actions and the US and Russia re-engaging over Ukraine. And that’s even before the latest …
4th March 2025
After months of speculation, investors will find out how the UK Chancellor plans to balance tax, spending and investment decisions in the face of a weaker growth outlook, higher borrowing costs and more defence spending. Join our economists for this …
A combination of weaker UK growth, higher yields and more defence spending make for a difficult Spring Fiscal Forecast for Rachel Reeves. In this special preview, our economists will highlight what to watch for in the Chancellor’s upcoming statement to …
Emerging Markets Capital Flows Monitor (Feb. 2025) …
India’s economy is in the midst of a softer patch which we think will continue for a few more quarters. Headline CPI inflation is now within touching distance of the Reserve Bank’s 4% target and looks set to continue easing over the coming months. The RBI …
Softer price pressures pave the way for further rate cuts The smaller-than-expected increase in South Africa’s headline inflation rate, to 3.2% y/y, supports our view that the Reserve Bank can press ahead with its easing cycle over the coming months. The …
Our ANZ Chart Pack has been updated with the latest data and our analysis of recent developments. The RBA began its easing cycle with a 25bp cut this month, but it appeared in no hurry to loosen policy settings further. We expect the Bank to cut again in …
BoT to cut rates further over the coming year Thailand’s central bank (BoT) today cut interest rates by a further 25bps (to 2.00%), and we think more easing is likely before the end of the year. Today’s decision was predicted by just 10 out of the 26 …
This page has been updated with additional analysis since first publication. With price pressures remaining subdued, RBA can ease a bit further The relatively soft CPI print for January should ease some of the RBA’s concerns about the stickiness of …
The Prime Minister’s announcement that defence spending will rise from 2.3% of GDP now to 2.5% by 2027 is likely to be only the start of a more substantial and longer-lasting increase in defence spending that could be funded by cuts to public spending …
25th February 2025
US Treasuries have continued to rally strongly today amid souring risk appetite. But we expect that the rally will reverse as Trump’s tariff policies prevent the Fed from cutting interest rates this year . Investor sentiment has taken a turn for the …
We think that there is likely to be substantial additional borrowing by European governments in the coming years to fund higher defence spending. This could amount to anything from 0.3% of GDP per year to 1.5%. Most will probably be financed nationally …
Growth picks up, recovery to continue in 2025 Nigeria recorded a further pick-up in GDP growth to 3.8% y/y in Q4 of last year and, with inflation and interest rates set to fall sharply, we expect the recovery to continue over the coming quarters. The …
House price growth unexpectedly reaccelerates The stronger 0.5% m/m rise in house prices in December suggests sellers still have the upper hand despite more homes coming onto the market and relatively weak buyer demand. This raises the risk that we have …
Industrial property has been a clear winner over the past five years, with double-digit annual rental growth far outpacing expectations. However, as we predicted early on, supply has been responsive and, combined with a normalisation in demand, those …
President Trump’s trade and other policies might cause turbulence over the next few years, but they are unlikely to derail the megatrends which will shape the global economy in the long run. We still expect AI to drive a revival in productivity growth …
MNB on hold ... and probably for some time The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think that its easing cycle will remain on pause throughout 2025. That’s a more hawkish view than the latest consensus …
Inflation jumps, Copom to deliver more tightening The jump in Brazil’s headline inflation rate to 5.0% y/y in the first half of February means Copom will almost certainly press ahead with another 100bp hike in the Selic rate to, 14.25%, at its March …
This year’s National People’s Congress (NPC) is taking place against a difficult backdrop for China’s economy; stimulus efforts have so far had only a fleeting impact on activity, even as the Trump administration has started raising barriers further to …
The recent underperformance of US equities marks a notable shift in the global market environment – but is this just a temporary state of affairs or the new order of things? Chief Markets Economist John Higgins and Senior Markets Economist Hubert de …
5th March 2025
Will the Bank of Japan be doing a victory lap this year in its quest to get inflation sustainably to 2%? And how far will it ultimately raise the policy rates? As the preliminary results of this year’s Shunto wage negotiations are released on 14th March …
28th February 2025
The strength of the recovery in housing activity and prices in the second half of last year caught many off guard. But can the market continue to recover at this pace in the face of higher stamp duty and a weaker economy? Members from our UK Housing, …
The decline in euro-zone negotiated wage growth to 4.1% in Q4 last year is likely to be followed by further large falls this year. This is because tax-free one-off wage payments which lifted German wages during 2024 will not be repeated and the …
A week spent visiting clients, policymakers and contacts in India underlines that the digital economy is thriving, that there is hope that India will not be hit hard by Trump’s tariffs, and that much-needed improvements in macroeconomic data reporting …
The Bank of Korea today cut interest rates by a further 25bps (to 2.75%) and made clear that further easing is on the way. With growth set to struggle and inflation likely to remain low, we are sticking with our view that the policy rate will be lowered …
The Australian and New Zealand dollars have fared worse than almost every other currency over the past few months. We think they will continue to do so. The US dollar has been on the back foot lately, unwinding some of its earlier Trump-era gains as US …
President Trump has signalled that he is open to the possibility of a new trade deal with China, though probably not before tensions rachet up further. This would likely involve China committing to more purchases of US goods, particularly energy, …
Further interest rate cuts coming The Bank of Korea cut interest rates today by 25bps (to 2.75%) – the third cut in the past four meetings. The move was predicted by 35 out of 36 analysts polled by Reuters, including ourselves. The central bank will …
While some Russian pipeline gas flows into the EU could resume as part of any Ukraine-Russia peace deal, at most such supplies would probably only recover to about a quarter of pre-invasion levels. From an energy price perspective, the looming ramp-up …
24th February 2025
January’s inflation data show that domestic price pressures are strong but easing. We remain convinced that they will decline much further this year. Data released this morning confirmed that euro-zone headline inflation edged up from 2.4% in December to …
Judging by the muted market reaction, investors don’t seem too bothered about the German f ederal election , which took place on Sunday. Notwithstanding the risk-off mood in global markets since the US open, which left Germany’s markets more or less …
BoI leaves rates on hold, but getting closer to easing The communications accompanying the decision by the Bank of Israel (BoI) to leave its policy rate on hold again today, at 4.50%, were slightly less hawkish than at the previous meeting, and support …
We think that the US utilities sector will outperform the other 'defensive' sectors in the stock market in 2025 and keep pace with the S&P 500, which we expect to rise to 7,000 this year, as utilities are well-placed to benefit from surging AI power …
Odds shifting in favour of another 50bp cut The fall in core inflation in Mexico in the first half of February combined with weak economic activity, means that Banxico is likely to press ahead with another 50bp cut at its meeting next month. The outturn …
Following yesterday’s federal election in Germany, this Update answers questions raised by clients in our on-line briefing (which can be viewed here ). What are the key takeaways from the election itself? The CDU’s leader, Friedrich Merz will be the next …
