Inflation accelerates, pressure mounts on CBN to deliver large rate hikes Nigeria’s headline inflation rate rose further to reach 28.2% y/y in November, as the naira’s weakening continued to pass through. Aggressive interest rate hikes are needed to …
15th December 2023
CBR slows down tightening, cycle not yet over Russia’s central bank (CBR) delivered a 100bp interest rate hike at today’s meeting, to 16.00%, and we still think that strong inflation pressures will force another rate hike in Q1. Today’s hike was in line …
Market capitalisation closes in on US$4trn The latest leg up in the Sensex triggered by the announcement of the BJP’s thumping victories in three state elections has continued into this week, helped by a broader rally in global equities following the …
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 Europe. And while China’s policy-induced …
The drop-back in the euro-zone Composite PMI in December provides more evidence that the economy is in recession as domestic and foreign demand contracts. The fall in the euro-zone Composite PMI from 47.6 in November to 47.0 in December left it lower than …
This page has been updated with additional analysis since first publication. Resilient activity to encourage BoE to double down on high for longer The rise in the flash composite activity PMI, from 50.7 in November to 51.7 in December, increased the …
“Big Australia” isn’t going anywhere We found out yesterday that population growth in Australia hit a record high of 2.4% y/y in Q2, as the post-pandemic boom in net overseas migration continued apace. (See Chart 1.) Moreover, we estimate that, allowing …
This page has been updated with additional analysis and charts since first publication. Recovery still underway The main bright spot was a healthy pick-up in industrial output thanks to the strength in exports. Retail sales and fixed investment remained …
Services sector running red-hot The strong Q4 Tankan released this week adds to the case for the Bank of Japan to abandon ultra-loose monetary policy. Of particular importance is that the Tankan shows mounting signs of overheating in the services …
Weak sentiment isn’t the main headwind China’s leadership gathered earlier this week for the Central Economic Work Conference (CEWC), which is held every December to discuss the economic targets and policy settings for the following year. The …
This page has been updated with additional analysis since first publication. Recession unlikely The composite PMI rebounded in December, which means we think there will unlikely be an incoming recession. The manufacturing PMI edged down further but the …
Rates on hold, February may be too soon for first rate cut Mexico’s central bank left interest rates unchanged at 11.25% again today and there was no further tilt away from the hawkish bias in the accompanying statement. The likelihood that Banxico will …
14th December 2023
Recent falls in Treasury yields have bought mortgage rates back down from a peak of 8% in October to 7% earlier than we had anticipated, setting the scene for a recovery in housing market activity in 2024. That said, as we don’t think borrowing costs will …
While central banks remain reluctant to declare victory over inflation just yet, bond markets appear more than happy to do so on their behalf. With most of the policy rate cuts which we forecast over the next couple of years now already discounted, we now …
Turkey’s gross international reserves have hit a record high recently which, on the face of it, suggests that the policy U-turn since May has helped to diminish the country’s balance of payments vulnerabilities. But the central bank’s large on- and …
Egypt: Year one of al-Sisi’s third term will be crucial Figures over the weekend showed that inflation in Egypt slowed but, with President al-Sisi all but confirmed to be re-elected, policy moves over the coming weeks will dictate how inflation develops …
The ECB left interest rates on hold today and pushed back against expectations that it will start cutting rates as soon as March next year. However, we think inflation and GDP growth will be lower than the ECB forecasts next year and anticipate five 25bp …
This week, we held a series of property roundtable discussions with clients in our London office as part of our World in 2024 series. In this Update, we outline our thoughts on the most interesting questions raised, covering electoral uncertainty and …
A third consecutive decline in sales volumes The slump in manufacturing sales volumes in October suggests that there are downside risks to the flash estimate that GDP rose by 0.2% m/m at the start of the fourth quarter. The 2.8% m/m decline in …
The Bank of England sprung no surprises, leaving interest rates at 5.25% for the third time in a row and pushing back against the prospect of near-term interest rate cuts. While the recent soft wage and inflation data mean the Bank may not wait as long as …
This page has been updated with additional analysis since first publication. Solid consumption growth supports soft landing The rebound in retail sales in November provides further illustration that the continued rapid decline in inflation is not coming …
ECB holding the line for now The ECB’s decision to leave its deposit rate unchanged at 4.0% today and make only limited changes to the policy statement suggests that policymakers are pushing back against market expectations for rate cuts to begin in March …
Few signs Bank of England is starting to contemplate rate cuts The Bank of England sprung no surprises, leaving interest rates at 5.25% for the third time in a row and pushing back against the prospect of near-term interest rate cuts. While the recent …
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 …
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 …
