PPI points to another above-target-consistent rise in core PCE The price data released this week suggest that inflationary pressures are proving stronger than the Fed anticipated. Based on the combined CPI and PPI data, we calculate that the Fed’s …
14th November 2024
This page has been updated with additional analysis since first publication. Faster GDP growth looks temporary The pick-up in euro-zone GDP growth to 0.4% q/q in Q3 is unlikely to be sustained. Timelier business and consumer surveys suggest that growth …
Poland’s economy stumbles in Q3 The 0.2% q/q contraction in Polish GDP in Q3 partly reflects the impact of flooding in September, the impact of which will reverse this quarter. Even so, we have become a bit more concerned about underlying weakness in the …
Inflation rises at fastest pace in over a year This response has been updated with additional analysis since first published Saudi Arabia’s headline inflation rate accelerated from 1.7% y/y in September to 1.9% y/y in October, a fourth consecutive rise …
This page has been updated with additional analysis since first publication. Resilient labour market heightens risk that policy easing will be delayed With the labour market still on sturdy ground, there is a growing risk to our forecast that the RBA will …
Growth slowing, but inflation pressures still strong The slowdown in Russian GDP growth in Q3, to 3.1% y/y, is likely to be followed by a further loss of momentum in growth over the coming quarters. But, alongside CPI data which show that inflationary …
13th November 2024
CPI points to target-consistent gain in core PCE The third consecutive 0.3% m/m gain in the core CPI in October is somewhat concerning, with our preliminary calculations pointing to another above-target-consistent 0.22 m/m gain in core PCE prices, …
This page has been updated with additional analysis since first publication. Slowdown in wage growth has further to run Wage growth eased markedly in Q3, as workers in the awards system received much smaller pay hikes than last year. Although wage growth …
Inflation jump scuppers December rate cut hopes Another bigger-than-expected jump in headline consumer price inflation last month will be enough to convince a majority of MPC members that conditions are not yet right to begin easing policy. We now think …
12th November 2024
Stimulus too small to turn around credit growth Both bank lending and broad credit growth hit fresh lows in October in a sign that monetary easing hasn’t done enough to drive a substantial turnaround in private credit demand. And after last week’s …
This page has been updated with additional analysis since first publication. BoE will look through rebound in pay growth Even though the rise in pay growth in September will probably be followed by a bigger gain in October, as the new 5-6% public sector …
This page has been updated with additional analysis since first publication. Deflationary pressures ease slightly but still pose a risk Headline CPI and PPI inflation both fell further in October. But core inflation edged up and factory gate prices fell …
11th November 2024
Confidence buoyed by lower inflation expectations The rise in the University of Michigan consumer sentiment index, despite uncertainty ahead of the US election, shows that economic developments remain the key driver of confidence in the aggregate. While …
8th November 2024
Muted job gain even worse that it seems The muted rise in employment in October was even weaker than it seems, as, like in September, it was propped up by strong gains in youth employment. While the unchanged unemployment rate will reassure the Bank that …
Easing cycle on pause, waiting for more clarity on fiscal policy The National Bank of Romania (NBR) left its policy rate on hold again today, at 6.50%, against a backdrop of stubborn above-target inflation and concerns about the loose fiscal stance ahead …
Inflation rises, more rate hikes on the cards The further rise in Brazil’s headline inflation rate to 4.8% y/y in October means that the central bank is almost certain to deliver additional interest rate hikes at its upcoming meetings. The risks are …
Unless there’s more to come later this evening, today’s fiscal announcement is another disappointment for those expecting substantial stimulus. The key measure announced at a press conference earlier is a refinancing of local government debt. Local …
Fed slows pace of rate cuts As expected, after a run of stronger activity and inflation data since it started its rate cutting cycle with a 50bp reduction in mid-September, the Fed opted for a more modest 25bp cut at the conclusion of its two-day FOMC …
7th November 2024
Surge in ULC illustrates upside risks to services inflation The BLS finally incorporated the upward revisions to its labour compensation estimates into the productivity and unit labour costs data, and the results are likely to trigger some inflation …
Easing cycle to continue, but risk of slower pace of cuts The Czech National Bank (CNB) cut its policy rate by 25bp again today, to 4.00%, and we still think that the conditions will be in place for the policy rate to be lowered to its estimated neutral …
Watch a recording of our post-MPC online briefing here . Budget means Bank may not cut rates as fast and far While cutting interest rates from 5.00% to 4.75% today, the Bank of England implied that the Budget means rates will continue to fall only …
Easing core inflation and peso recovery leave 25bp cut in play The larger-than-expected rise in Mexico’s headline inflation rate, to 4.8% y/y in October, was driven entirely by a jump in agricultural price inflation. Core inflation edged down last month …
This page has been updated with additional analysis since first publication. Retail sales strong in September but unlikely to keep rising rapidly Euro-zone retail sales rose in September rounding off a good quarter for retailers. We suspect that sales …
Riksbank increases pace of cuts, but doesn’t change its terminal rate forecast The Riksbank cut its policy rate by 50bp today to 2.75%, but the accompanying policy statement suggested that it plans only two more 25bps rate cuts to take it to a …
German industry continues to struggle The German industrial production release will be overshadowed by the break-up of Germany’s ruling coalition, which we will comment on later this morning. But the further fall in industrial output in September …
This page has been updated with additional analysis since first publication. House prices rise to record high and will accelerate next year October’s 0.2% m/m rise in Halifax house prices suggests that the recent momentum in house prices has a bit further …
Exports to remain robust in the near term despite Trump victory Export values grew y/y at the fastest pace in more than two years, and export volumes picked up too. We expect shipments to stay strong in the coming months – any drag from potential Trump …
Growth to cool in the coming quarters GDP growth accelerated in Q3 but we think this strength is unlikely to last as slower growth in remittances, tighter fiscal policy and weaker export demand weigh on activity. According to the data published today, GDP …
Regular wage growth may already have peaked The strong pay hikes in this year’s spring wage negotiations now seem to be fully reflected in labour cash earnings and we expect wage growth to slow again next year. According to today’s preliminary estimate, …
Copom hikes again Brazil’s central bank hiked the Selic rate for a second consecutive meeting, by 50bp to 11.25%, today but this has more to do with the domestic macro backdrop and shoring up monetary policy credibility than a response to the market …
6th November 2024
NBP leaves rates on hold, risks to our rate forecast shift up slightly The decision by the National Bank of Poland (NBP) to leave its policy rate on hold again today, at 5.75%, was never in doubt, and we think that interest rate cuts are unlikely to …
Rebound in mortgage activity short-lived Rising borrowing costs snuffed out the nascent recovery in mortgage activity in October, with home purchase and refinancing applications both slumping after a promising end to September. This puts to bed any hope …
Contraction in housing activity drags headline construction PMI down After a strong September the headline CIPS construction PMI dropped back to 54.3 in October, although that still points to an expansion of construction activity. A rebound in long-term …
Rates on hold, set to remain unchanged Bank Negara Malaysia (BNM) today left its main policy rate unchanged at 3.0%, and hinted that it was in no hurry to change rates anytime soon. The decision comes as no surprise – the outcome was correctly predicted …
Trump appears to be edging ahead The presidential election remains too close to call, but Donald Trump does appear to be edging ahead in some of the key swing states. At close to 11.30pm ET, the NYT gives Trump a 91% chance of victory, expecting him to …
This page has been updated with additional analysis since first publication. Rise in joblessness has further to run The modest rise in the unemployment rate last quarter belies the precarity of the jobs market. We still believe the unemployment rate will …
5th November 2024
The further rise in the ISM services index to a two-year high in October suggests the services sector is continuing to soar, contrasting with the recent weakness in manufacturing. The strong rebound in the employment index is reassuring given the weakness …
Goods trade balance improves, but for the wrong reasons The improvement in the goods trade position in September was for all the wrong reasons, with a fall in imports outpacing a decline in exports. While this suggests that net trade provided a small …
Surge in imports to prove short-lived The trade deficit widened to $84.4bn in September, from an upwardly revised $70.8bn in August, as imports surged ahead of the short-lived port strike in October. Goods exports declined 1% m/m from $179.2bn to …
A positive start to Q4 for the Gulf This response has been updated with additional analysis since first publication. October’s batch of PMIs showed an increase across all of the Gulf economies, although there remained underlying signs that non-oil …
Indonesia GDP (Q3 2024) Growth has been accelerating, not stable as the figures suggest Official figures released today suggest that economic growth in Indonesia was virtually unchanged again last quarter, but we don’t have much faith in the official …
RBA will cut rates early next year Although the Reserve Bank of Australia maintained a broadly neutral tone at its meeting today, we still think it start to lower interest rates as soon as February next year. The Bank’s decision to leave rates unchanged …
Dovish central bank hints at further rate cuts The State Bank of Pakistan (SBP) lowered its policy rate today by a further 250bps (to 15.0%) and sounded more dovish than it has done in previous meetings. Today’s cut marks the fourth consecutive meeting …
4th November 2024
Another upside surprise likely to reenforce CBRT’s hawkish stance The smaller-than-expected fall in Turkish inflation in October, to 48.6% y/y, is likely to dash any remaining hopes that a monetary easing cycle will start this year. The risks now seem …
Manufacturing hampered by temporary disruptions The decline in the ISM manufacturing index to a 15-month low in October suggests that the sector continued to struggle as hurricanes and the ongoing strike at Boeing disrupted manufacturing activity further …
1st November 2024
This page has been updated with additional analysis since first publication. Temporary disruptions can’t explain all the labour market weakness The near-complete flatline in payrolls in October was only partly due to disruptions caused by hurricanes and …
Inflation to drop sharply next year Another larger-than-expected fall in both headline and core inflation in Switzerland will increase concerns that the country could temporarily enter deflation next year. This will pile on pressure on the SNB to act …
This page has been updated with additional analysis since first publication. Mortgage rates will still fall next year and support house prices October’s 0.1% m/m rise in Nationwide house prices was a bit weaker than expected (consensus forecast +0.3% m/m, …
Heading for a weak third-quarter The unchanged level of GDP in August and downgrade to July puts third-quarter growth on track to sharply undershoot the Bank of Canada’s estimate of 1.5%. That provides some support to our view that the Bank will cut …
31st October 2024
Inflation news mixed; real economy still looks good for Q4 The news on prices was mixed, with the September data showing that the core PCE deflator increased at a slightly faster 0.25% m/m (or 3.0% in 1m annualised terms) and, in part due to some modest …
