Fed forecasts one rate cut this year, but notes inflation progress This publication was resent to correct the error in the headline in an earlier version. The median FOMC projection now shows only one 25bp rate cut this year, but it was a relatively close …
12th June 2024
First month of target-consistent price data this year Core CPI increased by a more modest 0.2%m/m in May and, although we still need to see the PPI data tomorrow, it looks like core PCE, the Fed's preferred inflation metric, increased by significantly …
This page has been updated with additional analysis since first publication. Inflation cooler than most expected Consumer price inflation came in cooler than most expected last month, which should reassure the RBI as it considers when to begin its easing …
EU protecting domestic producers but not ending Chinese EV imports Reports that the European Commission will “provisionally apply” additional duties of up to 25% on imports of EVs from China from July, on top of the 10% tariff already in place, are in …
BoT on hold, but cuts likely later in the year Thailand’s central bank (BoT) today left interest rates unchanged and appeared in no rush to loosen policy. We think the weakness of the economy and very low inflation will persuade the central bank to …
This page has been updated with additional analysis since first publication. Despite stagnating in April, economy will be a tailwind for the next govt The stagnation in GDP in April (consensus 0.0%, CE -0.1%) doesn’t mean the economic recovery has been …
This page has been updated with additional analysis since first publication. Producer prices will likely fall again soon due to overcapacity Producer prices picked up for the first time in eight months and consumer price inflation held steady in May. We …
Rise in services inflation takes rate cuts off the table The rise in inflation in Brazil to 3.9% y/y in May and, more importantly, the re-acceleration in underlying core services inflation means we no longer expect a rate cut at the Copom meeting next …
11th June 2024
This page has been updated with additional analysis since first publication. S ticky wage growth a lingering concern for the BoE The stickiness of wage growth in April will be a lingering concern for the Bank of England. But with employment falling …
Inflation hits slowest pace in over a year Egypt’s headline inflation dropped back from 32.5% y/y in April to 28.1% y/y, the lowest outturn since the start of 2023. Inflation is likely to rise again in June and July due to government price hikes, …
10th June 2024
Macron’s gamble adds to risks for public finances Support for the centrists has held up quite well in European elections but this was overshadowed by the jump in votes for the far-right in France and President Macron’s surprise decision to dissolve …
Payrolls outperform, but gap with household measure growing The bigger-than-expected 272,000 gain in non-farm payrolls in May will soothe recent fears that the bottom had suddenly dropped out of the economy. With average hourly earnings increasing by 0.4% …
7th June 2024
Labour market conditions continue to loosen The further rise in the unemployment rate in May shows that the labour market continues to loosen, but the surprising pick-up in wage growth still provides reason to be cautious about the idea that the Bank of …
Mexico’s strong services inflation to concern hawkish Banxico Mexico’s headline inflation rate came in at a weaker-than-expected 4.7% y/y in May but the continued strength of core services inflation means that it is increasingly likely that Banxico will …
CBR sounds hawkish, rate hike becoming more likely Russia’s central bank (CBR) left its key policy rate on hold at 16.00% but delivered a much more hawkish message at today’s meeting. Inflation concerns are likely to persist for some time and we think the …
Confirmation house prices are stagnant The slight decline in the Halifax house price index in May confirmed that the increase in mortgage rates since the start of the year has caused house prices to stall. Mortgage rates have continued to edge up, so …
RBI still on course for August rate cut The RBI kept the repo rate on hold at 6.50% today as expected but, notably, two of out of the six MPC members voted for a cut. With inflation likely to continue falling over the coming months, we maintain our …
This page has been updated with additional analysis since first publication. Exports set to remain robust in the near-term Export values rose y/y at the fastest pace since April 2023, with export volumes also picking up. We think exports will remain …
Improvement in trade balance may not point to economic strength Stronger commodity exports boosted the trade figures in April, with the goods deficit narrowing to $1.0bn, from a downwardly revised $2.0bn in March. However, weaker import volumes suggest …
6th June 2024
Net trade set to weigh on GDP again this quarter The April trade data suggest that net trade is on track to weigh on GDP growth again this quarter, but that is primarily due to continued strength in imports, which paints a better picture of domestic …
ECB cuts but future easing uncertain Any celebrations about today’s 25bp rate cut by the ECB are likely to be muted at best, given that the decision was fully discounted by financial markets and the most recent inflation and wage data have dampened …
This page has been updated with additional analysis since first publication. Euro-zone sales ticked down but past the worst Retail sales ticked down in April we expect them to rise gradually from here. The 0.5% m/m decline in retail sales in April was a …
Construction activity picks up in both housing and commercial sectors The headline CIPS construction PMI rose to a two-year high of 54.7 in May. Both the commercial and housing balances improved, with the latter rising above 50 for the first time since …
Activity softens slightly, but still running hot Russia’s economy appears to have had a slightly softer start to Q2, with industrial production and retail sales growth both slowing in April. Still, the latest indicators for May have remained strong and …
5th June 2024
ISM services index rebounds, but still consistent with lower inflation The rise in the ISM services index to 53.8 in May, from 49.4, meant that the weighted ISM index rebounded last month, despite a decline in the manufacturing index. That still leaves it …
One down, many more to come Today’s interest rate cut from the Bank of Canada will be the first of many, and the dovish tone of the accompanying communications suggests that another rate cut in July is already nailed on. For now, our forecast is that …
Rates on hold until 2025 Poland’s central bank (NBP) left its policy rate on hold at 5.75% today and policymakers are likely to maintain fairly hawkish communications as inflation rebounds in the second half of the year. We don’t expect the easing cycle …
Mortgage applications fall to three-month low The decline in mortgage rates in May was not enough to stop home purchase mortgage applications from falling to a three-month low. The chances of a quick turnaround in June currently look slim, as the increase …
GDP growth will accelerate over the second half of the year While GDP growth slowed to a crawl in Q1, a rebound in real household incomes should contribute to a pick-up in activity over the second half of the year. The 0.1% q/q rise in Q1 GDP was a …
This page has been updated with additional analysis since first publication. Wage growth will climb above 2.5% this year Base pay rose the most since 1994 in April and we think it will accelerate a bit further as the strong pay hikes agreed in the spring …
Q1 pick-up likely to be followed by weaker Q2 The sharp pick-up in Brazil’s GDP growth to 0.8% q/q in Q1 is a temporary rebound from a weak patch in the second half of last year and doesn’t mark the start of a strong recovery. Still, the pace of economic …
4th June 2024
Modest contraction in Q1, shows 2024 growth likely to be muted at best South Africa’s economy contracted by 0.1% q/q in the first quarter of the year and the latest evidence suggests that fragility has continued into Q2. A less acute drag from …
This response has been updated with additional analysis of the UAE's May release. Gulf continues to lead the way as Egypt shows positive signs May’s batch of PMIs showed that private non-oil sectors have remained a point of strength in the Gulf economies …
This webpage has been updated with additional analysis. Headline inflation unchanged in May, doubts about future rate cuts Switzerland’s inflation rate remained at 1.4% in May as an increase in rents was offset by a further fall in core goods prices. …
Fall in ISM manufacturing index suggests economy losing momentum The drop in the ISM manufacturing index in May adds to the sense that the economy is losing momentum, while the drop back in the prices paid index should soothe concerns about a potential …
3rd June 2024
PMI plummets due to tight policy and weaker credit conditions South Africa’s manufacturing PMI plummeted in May and, while we expect conditions to improve as the electricity situation continues to stabilise, alongside recent activity data it underlines …
OPEC+ keep screws tight for another quarter The agreement by OPEC+ to rollover voluntary production cuts for another quarter will, in our view, push the crude oil market into a sizeable deficit in Q3. Oil supply will be more constrained than we had …
Russia outperforming, CEE continues to struggle The manufacturing PMIs for May show a divergence in the region, with conditions improving slightly in Czechia and Russia’s economy continuing to boom. But industry weakened sharply in Poland and Turkish …
Sheinbaum is president-elect, Morena coalition on course for majority The ruling Morena candidate, Claudia Sheinbaum, is on course to be declared the country’s next (and first female) president after Sunday’s election and the party’s coalition also …
Inflation surprises to the upside, bumpy disinflation lies ahead The stronger-than-expected rise in Turkish inflation to 75.45% y/y in May (consensus 74.8%) is slightly disappointing. It had looked like price pressures were easing in recent months, but …
Modi on the brink Narendra Modi appears well on course for a third consecutive term as India’s Prime Minister according to exit polls that project another big parliamentary majority for the BJP. Admittedly, exit polls have a patchy track record in India …
2nd June 2024
Growth softer than expected, but strength under the surface The 1.7% annualised gain in GDP in the first quarter was weaker than the Bank of Canada’s forecast for an above-potential 2.8% increase. With consumption growth looking much stronger than …
31st May 2024
Inflation data still too strong, but slump in real spending the bigger story As expected, the PCE deflator data suggest that, although not quite as bad as the first three months of the year, inflation was still running above target in April. At the same …
This page has been updated with additional analysis since first publication. Economy booming on eve of election The GDP figures for Q1 confirm that India’s economy slowed a touch at the start of the year but was nonetheless still booming on the eve of the …
This page has been updated with additional analysis since first publication. Increase in inflation won’t stop ECB from cutting next week May’s increases in headline and core inflation – and jump in services inflation to a seven-month high – won’t stop the …
This page has been updated with additional analysis since first publication. Drag on activity from high interest rates continues to fade While April’s money and lending figures suggest the recent rebound in the housing market is cooling and households …
Net lending subdued on the back of rising interest rates Following two consecutive quarters of declines, net lending to property reached £891m in April. The increase was driven by a £731m rise in lending to standing investments, but development lending …
Acceleration in growth, with rebalancing under the surface The strength in Turkey’s economy in Q1 – GDP expanded by a whopping 2.4% q/q – was driven by a large boost from net trade while private consumption growth slowed sharply. This offers signs that …
Persistently high mortgage rates cause prices to stagnate Despite a small increase in the Nationwide house price index in May, the big picture is that the slight rise in mortgage rates since the start of the year has caused house prices to stagnate. The …
This page has been updated with additional analysis since first publication. GDP should rebound this quarter On balance, the modest decline in industrial production and the rebound in retail sales in April point to a decent rebound in GDP this quarter. …
