CBR delivers bumper hike, leaves door open for further tightening Russia’s central bank (CBR) stepped up to the plate with a 200bp hike to its key policy rate today, to 18.00%, in response to the overheating economy and a renewed surge in inflation. While …
26th July 2024
The Monetary Authority of Singapore (MAS) kept policy unchanged today, but we think today’s marginally dovish statement raises the likelihood of monetary easing in October. The MAS conducts monetary policy by targeting the nominal effective exchange rate …
This website has been updated with additional analysis since first publication. Underlying inflation may moderate faster than we expect The sharp slowdown in inflation excluding fresh food and energy in Tokyo this month reduces the likelihood that the …
Stronger-than-expected growth unlikely to prevent September rate cut The sharper-than-expected pick-up in second-quarter GDP growth to 2.8% annualised should make the Fed a bit more comfortable about keeping policy unchanged next week, but the recent …
25th July 2024
Inflation rises, no more cuts this year The stronger-than-expected rise in Brazil’s headline inflation rate, 4.45% y/y in the first half of July, was mainly driven by a pick-up in underlying core services inflation. This, coming alongside fiscal concerns …
This page has been updated with additional analysis since first publication. German recovery petering out The large fall in the German Ifo BCI in July, which follows a similar drop in the Composite PMI published yesterday, adds to the impression that the …
Surprise cut points to mounting policymaker concern The PBOC’s decision to cut the 1-year interest rate on its medium-term lending facility (MLF) earlier today is unusual for two reasons. First, the 20bp reduction is double the size of the PBOC’s usual …
The latest GDP figures suggest that the central bank’s concerns about the weakness of domestic demand will only rise. With concerns about the health of the economy set to overtake those about inflation, we continue to expect the Bank of Korea to start …
New home sales remain weak New home sales were essentially unchanged in June after their 15% slump the month before, not helped by mortgage rates which remained stubbornly high at around 7%. So far in July, borrowing costs have declined and currently sit …
24th July 2024
Gradual loosening cycle continues and another cut in September looks likely Following its interest rate cut today, the Bank of Canada reiterated that further cuts are likely if inflation continues to ease in line with its expectations. Our forecast for …
The larger-than-expected rise in Mexican inflation in the first half of July, to 5.6% y/y, was driven entirely by a jump in non-core inflation; core inflation fell. Our base case remains that Banxico will resume its easing cycle next month (as has been …
GDP growth appears to be slowing at the start of Q3 July’s composite PMI suggests some of the recent rebound in activity this year may have been due to catch-up growth following the weakness of activity last year and GDP growth is easing towards a more …
This page has been updated with additional analysis since first publication. Recovery stalling The flash PMIs for July suggest that the euro-zone’s recovery may be fizzling out at the start of Q3, while output price pressures eased but remained high in …
Inflation edges down providing cover for interest rate cut in September South Africa’s headline inflation rate edged down to 5.1% y/y in June and with core inflation returning to the mid-point of the SARB’s 3-6% target range, we think the SARB will be in …
Recovery will retain momentum across second half of 2024 The strong rebound in the composite PMI in July suggests that the recovery of Japan’s economy will continue across the second half of the year. According to the flash estimate released today, the …
Spike in rates takes sales to 13-year low The sharp rise in mortgage rates in April was the catalyst for existing home sales falling to a 13-year low in June. However, borrowing costs have since receded and timelier indicators of activity such as mortgage …
23rd July 2024
Cardoso’s 50bp hike likely the last, but cuts a long time off The Central Bank of Nigeria delivered a 50bp hike to its policy rate, to 26.75%, at its meeting today and, while this probably marks the end of the tightening cycle, Governor Cardoso’s …
Rates on hold, cuts still some way off Turkey’s central bank left its key policy rate on hold today, at 50.00%, and the communications accompanying the decision suggest that interest rate cuts are still some way off. While most analysts expect a monetary …
Economic recovery still on track Poland’s retail sales data released today were slightly weaker than expected, but the big picture is that the whole set of activity data for June suggest that the economic recovery has remained relatively strong. Taken …
22nd July 2024
PBOC responds to leadership's call for more easing The PBOC has lowered its short-term policy rate for the first time since last summer, in line with our expectation for a cut this quarter. Its efforts to prevent long-term yields from falling therefore do …
After his disastrous debate performance, President Joe Biden has dropped out of the race to be re-elected in this November’s election. His withdrawal letter acknowledges Vice President Kamala Harris as “an extraordinary partner in all this” and, in a …
21st July 2024
The global IT outages affecting Windows software are causing huge temporary disruption to certain sectors including travel and healthcare, but while things are still very uncertain we do not anticipate a major macroeconomic or financial market impact at …
19th July 2024
Cracks in consumption getting larger After a brief rebound in April, the renewed fall in retail sales volumes in May suggests that consumption growth is weakening again. We estimate that sales volumes fell by around 1% annualised in the second quarter, …
This page has been updated with additional analysis since first publication. Limited wiggle room for the new Chancellor June’s disappointing public finances figures suggest that public borrowing is on track to come in a little higher than the OBR’s …
Sales surprisingly weak given supportive backdrop The unexpectedly large fall in retail sales in June reversed the jump in May, and suggests that rising real incomes and improving sentiment have so far failed to translate into a significant increase in …
GDP growth accelerated sharply the second quarter but, with a jump in inflation set to curtail consumer spending and the boost from tourism likely to fade, we still expect a sharp slowdown in the coming quarters. According to the advanced estimate …
This website has been updated with additional analysis since first publication. Inflation will remain above target until early-2025 While the Bank of Japan will still see the July Tokyo CPI before its meeting later this month, the June nationwide figures …
SARB holds interest rates but cut now likely in September The South African Reserve Bank decision to leave its repo rate unchanged at 8.25% was of little surprise but there was increased optimism that inflation is moving towards the 4.5% mid-point of the …
18th July 2024
No cut, no guidance Today’s decisions to leave interest rates on hold and give no clear signals about the future path of interest rates was in line with expectations. A cut in September still seems more likely than not, but it will depend on whether …
This page has been updated with additional analysis since first publication. Encouraging, but interest rates may not be cut in August While the easing in wage growth in May was broadly in line with what the consensus and the Bank of England expected, it …
This page has been updated with additional analysis since first publication. A loosening labour market should forestall further rate hikes Although job growth remained healthy last month, it didn’t prevent the unemployment rate from rising anew. And we …
Drag from net trade will moderate Q2 GDP rebound While the widening of the trade deficit in June points to a sizeable drag from net exports on Q2 GDP growth, activity should still have rebounded last quarter. The 5.4% y/y rise in export values was weaker …
Manufacturing sector bucking negative tone of the surveys The rise in manufacturing output in June was better than we expected based on the small fall in hours worked, but it owed a lot to a rebound in motor vehicle production, which seems unlikely to be …
17th July 2024
Multi-family driven increase in housing starts The rise in housing starts and building permits in June is not as good as it seems at first glance, as it was driven by gains in the volatile multi-family sector, which we think will prove temporary. …
BI hints at rate cuts in Q4 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 in Q4. Today’s decision was correctly predicted by all 35 analysts polled by …
This page has been updated with additional analysis since first publication. We’re holding a 20-minute online briefing at 9.30am BST on Thursday 18 th July to discuss how today’s CPI and tomorrow’s labour market releases influence the chances of a rate …
This page has been updated with additional analysis since first publication. With inflation falling rapidly, the RBNZ’s August meeting is now “live” Today’s CPI release confirms that inflation is all but certain to return to the RBNZ’s 1-3% target by Q3. …
Odds still favour a July rate cut The Bank of Canada’s preferred CPI-trim and CPI-median measures of core prices rose at an above-target monthly pace for the second month running in June. Nonetheless, with the Bank’s Business Outlook Survey , released …
16th July 2024
Strong control group sales ease fears of consumer slump Although retail sales were unchanged in June, the strong 0.9% m/m rise in control group sales should ease concerns about the plight of the consumer in the wake of the renewed slump in sentiment. …
Inflation nudges down but a minor bump is on the cards in Q3 Saudi Arabia’s headline inflation rate edged slightly down to a six-month low of 1.5% y/y in June and, while we expect a small increase in the headline rate during Q3, the bigger picture remains …
Stronger momentum in manufacturing The continued rise in manufacturing sales and new orders suggests that the sector gained some momentum in the second quarter. However, we expect that strength to fade this quarter. The 0.4% m/m rise in manufacturing …
15th July 2024
Inflation at a peak Nigeria’s headline inflation rate edged up to 34.2% y/y in June on the back of the pass-through from previous naira falls. But we think this marks the peak and inflation should start to decline. If right, that’s likely to lend more …
This page has been updated with additional analysis since first publication. Euro-zone manufacturing still struggling Industrial production in the euro-zone fell again in May and we think the outlook remains poor. The 0.6% m/m decrease in euro-zone …
This page has been updated with additional analysis since first publication. Growth slowed last quarter but should regain some ground in H2 Weaker-than-expected official GDP figures show that China’s economy lost momentum in Q2. But we doubt this marks …
More evidence of consumers struggling The further decline in the University of Michigan consumer sentiment index in July adds to the evidence that consumers are increasingly struggling with high interest rates. Although the link between confidence and …
12th July 2024
Surprise inflation jump scuppers August rate cut hopes The surprise jump in headline consumer price inflation last month will be enough to convince any MPC members who may have been leaning toward rate cuts at the August policy meeting that conditions are …
PPI a lot better than it looks Ignore the fact that core PPI increased by a slightly bigger-than-expected 0.4% m/m in June and that May was revised to a 0.3% rise from unchanged. The PPI components that feed into the Fed’s preferred PCE deflator inflation …
Credit growth hits a new low Both bank loan and broad credit growth hit a record low in June. While further fiscal loosening may provide some support to credit growth in the near-term, the continued weakness of the property sector means that any increase …
Inflation drops sharply and will remain below 2% over coming months The Riksbank’s target measure of inflation, CPIF, dropped to just 1.3% in June, almost half the level in May and the lowest level since the end of 2020. This was far below the consensus …
This page has been updated with additional analysis since first publication Tailwind from strong exports set to persist Export values grew y/y at the fastest pace in 15 months, with export volumes hitting record highs. We think exports will stay robust in …
