This page has been updated with additional analysis since first publication. Flash PMI points to further rapid rebound in activity The rise in the composite PMI to a 16-month high suggests that the strong rebound in activity that started last quarter …
22nd August 2024
Fed minutes confirm September rate cut The minutes of the Fed’s late July policy meeting showed broad agreement that “it would likely be appropriate to ease policy at the next meeting” in September. While the weak July Employment Report released since …
21st August 2024
Downward revisions leave employment growth still healthy The 818,000 downward revision implied by the preliminary benchmark estimate to the non-farm payroll data were roughly in line with what we had expected based on the earlier data implied by the …
Inflation plunge seals the deal on a rate cut in September The larger-than-expected decline in South Africa’s headline inflation rate, to 4.6% y/y, in July strengthens the case for the SARB to start its easing cycle with a 25bp cut to 8.00% at its next …
Bank Indonesia today left its policy rate unchanged at 6.25%, but the central bank’s dovish commentary supports our view that rates will be cut before the end of the year. Today’s decision was correctly predicted by all 30 analysts polled by Reuters, …
Thailand’s central bank (BoT) today left interest rates unchanged but if, as we expect, growth slows further and inflation remains very low, we think the central bank will start loosening policy from October. Today’s decision came as little surprise and …
This page has been updated with additional analysis since first publication. Limited wiggle room for the Chancellor at the Budget July’s public finances figures continued the recent run of bad news on the fiscal position, with public borrowing on track to …
Renewed downward momentum in core prices The softer monthly gains in the Bank of Canada’s preferred core price measures in July suggest that the previous two months reflected normal volatility rather than a stalling of the downward trend in core …
20th August 2024
CBRT staying the course The Turkish central bank (CBRT) left its main policy rate unchanged again today, at 50.00%, and offered little sign that it will soon start an easing cycle. While most other analysts expect monetary loosening to start in Q4, we …
Riksbank cut will be followed by one at each remaining meeting this year Alongside the Riksbank’s decision to reduce the policy rate by 25bp today to 3.5%, policymakers also lowered their rate expectation for the end of this year from either 3.25% or 3.0% …
RBA won’t be rushed into rate cuts The minutes of the RBA’s August meeting confirmed what we already knew from Governor Bullock's post-meeting press conference: the Board discussed the case for a 25bp hike before ultimately deciding to leave rates …
The 0.6% q/q fall in Chilean GDP in Q2 is mainly payback for a strong Q1, and we expect a return to positive growth in Q3. Still, the Q2 figures should the central bank confidence to deliver a couple of more cuts this year. The outturn was in line with …
19th August 2024
Thailand’s economy slowed in Q2 and we expect it to decelerate a bit further in the coming quarters as the boost from tourism fades and with uncertainty around fiscal policy now elevated, risks to our already downbeat growth outlook are skewed to the …
Rebound in confidence driven by political change The small rebound in the University of Michigan consumer sentiment index in August was entirely driven by recent political developments, and still leaves it below its level for most of this year. At face …
16th August 2024
Housing starts hit by hurricane The slump in both housing starts and building permits in July, to the lowest levels since the epoch of the pandemic, only partly reflects the temporary impact of Hurricane Beryl. Accordingly, even though lower interest …
Manufacturing sales weakest since January 2022 It was an extremely poor month for the manufacturing sector in June, with sales falling to a two-and-a-half-year low. As new orders slumped, inventories are elevated and the S&P Global manufacturing PMI for …
This page has been updated with additional analysis since first publication. Better start to Q3 not as good as it looks After a weather disrupted Q2, July’s 0.5% m/m rise in retail sales volumes (consensus forecast 0.6% m/m, CE forecast 0.5% m/m) was …
The second estimate of Q2 GDP confirmed that Malaysia’s economy accelerated sharply but, with inflation set to jump, commodity prices likely to decline and the boost from tourism set to fade, we still expect a slowdown ahead. According to the second …
Strong domestic demand means BanRep likely to maintain the pace of easing The Colombian economy isn’t nearly as weak as the meagre 0.1% q/q rise in headline GDP in Q2 would suggest; there was a large drag from net trade while domestic demand remained very …
15th August 2024
Temporary disruptions hit IP The fall in manufacturing output in July was entirely driven by temporary disruptions which should reverse this month. Excluding those temporary factors, this is a strong report which, together with last month’s solid gain in …
Don’t bet against the American consumer There was almost nothing in the July retail sales report for the perma-bears to latch on to, with the rebound in retail sales led by a recovery in vehicle sales, but encouragingly broad-based with control group …
Inflation finally on the way down Nigeria’s headline inflation rate eased to 33.4% in July, the first time it had slowed in 19 months, as the passthrough from previous naira falls has finally started to faded. With inflation having now peaked, we think …
Inflation likely to ease as 2025 approaches Saudi Arabia’s headline inflation rate was unchanged at 1.5% y/y in July, but we expect that the headline rate will ease back over the remainder of this year and potentially fall back below 1% y/y by early 2025. …
Norges Bank at risk of falling behind the curve Norges Bank’s decision to leave its policy rate unchanged at 4.5% was never in doubt. We still suspect that continued declines in inflation will allow it to start cutting before the end of the year, which …
BSP cuts rates, more easing to come The central bank in the Philippines (BSP) kicked off its easing cycle today with a 25bps cut (to 6.25%), and hinted that further easing was likely over the coming months. With inflation set to drop back further and …
Swiss economic growth returns to trend rate Switzerland’s sporting event-adjusted GDP growth accelerated to 0.5% q/q in Q2, its fastest pace in over a year and slightly above our forecast of 0.4%. At the margin this may give the SNB some caution against …
This page has been updated with additional analysis since first publication. Strength in Q2 won’t last While the economy flatlined in June, it still managed to grow by 0.6% q/q rise in GDP in Q2. That said, some of the rebound in activity in Q2 may have …
Deceleration eases with growth nearing turning point After slowing in Q2, economic momentum appears to have stabilised somewhat last month, with a pick-up in consumer spending and services activity largely offsetting a slowdown in investment and …
This page has been updated with additional analysis since first publication. Labour force continues to absorb surge in workers The slight uptick in the unemployment rate last month belies a renewed acceleration in employment growth. Accordingly, the data …
Strong rebound in consumption points to further monetary tightening The strong rebound in GDP last quarter was driven by the first rise in consumption in more than a year and should encourage the Bank of Japan to press ahead with another rate hike later …
CPI consistent with a 25bp rate cut rather than 50bp The 0.15% m/m increase in all-items CPI and the 0.17% increase in core CPI in July suggest that, after the temporary relapse in the first quarter, the disinflationary trend has firmly reasserted …
14th August 2024
Thailand's Constitutional Court today dismissed Prime Minister Srettha Thavisin, a move that could trigger further political instability and bodes poorly for the country’s economy. Srettha, a real estate mogul, becomes the fourth Thai prime minister in 16 …
Euro-zone growth likely to remain weak Data released today confirmed that the euro-zone economy expanded by 0.3% q/q in Q2, but surveys published for July suggest that it may be slowing again. The second estimate of euro-zone GDP in Q2 was unchanged from …
Strong second quarter will dampen expectations for rate cuts The larger-than-expected pick-up in Polish GDP growth in Q2, to 1.5% q/q (from 0.8% in Q1), suggests that the risks to our forecast for GDP to expand by 3% over the year as a whole are now …
This page has been updated with additional analysis since first publication. Soft surprise opens the door to more interest rate cuts later this year The smaller-than-expected rise in CPI inflation from 2.0% in June to 2.2% in July (consensus forecast …
RBNZ will loosen policy aggressively The RBNZ began its easing cycle with a 25bp rate cut at its meeting today. Although the Bank seemed to strike a cautious tone about further policy easing, we think it will cut rates more aggressively than many are …
Muted PPI is more good data The muted 0.1% m/m increase in final demand PPI and unchanged core PPI for July is not quite as good as it looks, but it is nevertheless consistent with the Fed’s preferred core PCE prices measure increasing at a below-2% …
13th August 2024
Credit growth starts to recover, private demand still weak Broad credit growth ticked up in July, while bank loan growth only slowed a touch. (See Chart 1.) We expect a continued acceleration in government bond issuance to support a further expansion of …
This page has been updated with additional analysis since first publication. Easing in wage growth clears path for more rate cuts later this year The further easing in wage growth will be welcomed by the Bank of England as a sign that labour market …
This page has been updated with additional analysis since first publication. Wage growth will cool in earnest The RBA probably won’t read too much into the fact that annual wage growth stalled last quarter. A gradual loosening of the labour market should …
This page has been updated with additional analysis since first publication. Disinflation back on track The drop in headline consumer price inflation to a one-year low in July should reassure the RBI that June’s surprise jump was a one-off and that the …
12th August 2024
Economy slows in Q2, but headline inflation rises further The slowdown in Russian GDP growth in Q2, to 4.0% y/y, suggests that the economy has lost a bit of momentum. But overheating pressures remain alive and the increase in inflation to 9.1% y/y in July …
9th August 2024
Not as bad as it looks The second consecutive small fall in employment might seem to suggest that the labour market has taken a further turn for the worse, but it mainly reflected soft part-time employment among younger and older people. The jump in …
Rise in inflation will add to Copom’s hawkishness, but rate hike unlikely The rise in Brazil’s headline inflation rate to 4.5% y/y in July was mainly driven by a pick-up in underlying core services inflation which will do little to quell the hawkishness …
Food prices drive up inflation but domestic demand remains weak Consumer price inflation ticked up in July, but this was entirely due to a weather-related rise in food price inflation. Producer price deflation was unchanged. While a ramp-up in fiscal …
Easing cycle continues despite peso weakness Mexico’s central bank opted to reduce its policy rate by 25bp, to 10.75%, at today’s meeting and the statement generally retained the moderately dovish tone from the last one. We think further rate cuts are …
8th August 2024
Rise in inflation leaves Banxico decision on a knife edge The rise in Mexico’s headline inflation rate, to 5.6% y/y in July, alongside the weakness in the peso means that Banxico’s interest rate decision later today will be a very close call between a cut …
This report has been updated with additional analysis and a chart and table of key figures. Inflation falls despite subsidy cuts Egypt’s headline inflation slowed from 27.5% y/y in June to 25.7% y/y in July, its lowest rate since December 2022. And this …
RBI could ease policy by year-end The recent market turmoil didn’t move the needle for the MPC today: it continued to strike a hawkish tone as the majority of members voted to keep the repo rate unchanged at 6.50%. But with inflation set to fall back …
The economy slowed sharply in Q2 and we expect below trend growth to persist over the rest of the year as tight monetary policy, slower growth in remittances and soft export demand weigh on activity in the Philippines. According to the data published …
