NBP keeps rates on hold, limited window for rate cuts this year The National Bank of Poland (NBP) left interest rates on hold again today, at 5.75%, and the scope for monetary easing this year looks relatively limited. We still think there is a …
6th March 2024
Boost to the economy now comes ahead of a bigger drag after the election The net fiscal giveaway of £13.9bn (0.5% of GDP) in 2024/25 in the Budget may at the margin help lift the economy out of its mild recession before an election later this year. But a …
Powell content to wait for more data Fed Chair Jerome Powell looks set to stick to his previous script in his testimony to Congress today and, assuming we are right that the January strength in core inflation will prove to be a blip, his remarks do not …
Mortgage rates back above 7% stifle demand recovery February’s mortgage applications data show rising mortgage rates put an end to what had been the start of a fairly promising recovery, following the low for applications in October 2023. We think this is …
This page has been updated with additional analysis since first publication. Euro-zone sales rose but still weak January’s retail sales data are consistent with our view that the near-term outlook for consumption is poor. While retail sales edged up by …
Construction PMIs edge closer to expansionary territory The headline CIPS construction PMI rose to 49.7 in February, just under the no change level. The rise was driven by the housing component, with commercial activity edging back a touch. As interest …
We hosted a Drop-in following the announcement that can be viewed on demand here . Central Bank of Egypt shifts back towards orthodoxy The announcement minutes ago from the Central Bank of Egypt that it has devalued the pound and hiked interest rates by a …
This page has been updated with additional analysis since first publication. Subdued activity will pave the way for rate cuts Although GDP growth last quarter was in line with what the RBA had expected, the Bank will take comfort from the fact that …
Survey shows little signs of growth or inflation acceleration The fall in the ISM services index to 52.6 in February, from 53.4, left our weighted composite index consistent with a stagnation in GDP in the first quarter. That said, with the survey …
5th March 2024
Very modest growth in Q4, but 2024 should be better South Africa’s economy posted a measly 0.1% q/q increase in GDP in the final quarter of last year and the latest evidence points to a soft start to 2024 too. But we still think that, with the drags from …
Gulf non-oil sectors strengthen in Q1; Egypt’s economy knocked by Israel-Hamas spillovers February’s batch of PMIs from the Middle East and North Africa continued to show that the Gulf’s private non-oil sectors have started 2024 on a strong footing. But …
This page has been updated with additional analysis since first publication. Above 2% inflation will allow BoJ to end negative rates in April Inflation jumped to well above 2% in Tokyo in February and will remain around that level for a few months. …
4th March 2024
Swiss CPI (February) Swiss disinflation ending but rate cuts now likely The period of disinflation in Switzerland is close to an end, but with inflation likely to remain close to 1% for the foreseeable future we think policymakers will start lowering …
This page has been updated with additional analysis since first publication. Inflation continues to rise, tightening cycle now at risk of restarting The stronger-than-expected rise in Turkish inflation to 67.1% y/y in February adds to our concerns given …
No evidence to support inflation rebound The unexpected fall in the ISM manufacturing index in February still leaves it on a gradual upward trend, but the more important news for the Fed is that there is still no sign that a material rebound in goods …
1st March 2024
Consumer resilience comes to an end The stagnation in Brazil’s GDP in Q4 and the decline in household consumption confirmed that the economy lost momentum sharply and, while we expect a pick-up in growth in the coming quarters, we’re now more confident in …
This page has been updated with additional analysis since first publication. ECB rate cut in April is not going to happen February’s euro-zone inflation data look like the final nail in the coffin for an April interest rate cut . The decline in headline …
PMI bounces, but still looks like a soft start to 2024 Although South Africa’s manufacturing PMI jumped in February, the sector appears to have made a soft start to the year. We still expect growth to pick up over the rest of this year as loadshedding …
Turkey and Russia continue to show signs of resilience The manufacturing PMIs out of Central and Eastern Europe (CEE) generally ticked up last month, but still suggest that industrial sectors remained weak. In contrast, the increases in the PMIs in Turkey …
Further substantial rise puts doubt on downbeat consensus forecasts Another sizeable monthly increase in the Nationwide house price index in February confirmed that lower mortgage rates are feeding through to higher prices. (See Chart 1.) But recent …
This report was first published on Friday 1 st March covering the official PMIs and Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Tuesday 5 th March. An encouraging improvement in services activity The PMIs are …
Resurgence in core prices a speed bump rather than pothole The surge in core PCE prices in January was largely as expected after the hot CPI and PPI reports. Although that surge has ruled out an early Fed rate cut, particularly in an environment where …
29th February 2024
Economy looking a bit better than the Bank expected The 1.0% annualised rise in fourth-quarter GDP was stronger than the stagnation that the Bank of Canada expected and, together with the downward revision to the third-quarter contraction, is reason to …
This page has been updated with additional analysis since first publication. Exceptional economic performance suggests no imminent rate cuts The GDP data for Q4 confirm that India’s economy ended last year with a bang. Looking ahead, we expect economic …
This page has been updated with additional analysis since first publication. Drag on consumption from higher interest rates fading January’s money and credit figures suggest the drag on consumer spending and the housing market from higher interest rates …
Net lending increases in January but new development still subdued Net lending to commercial property increased for the eleventh consecutive month in January. Over H1 2024, we expect investment and lending to new development to slowly recover, as capital …
German state figures point to fall in euro-zone inflation The fall in CPI inflation in most German states in February all but confirms that both German and euro-zone HICP inflation will have declined broadly in line with expectations this month. This …
Swiss economic growth likely to accelerate further The second successive 0.3% q/q increase in Swiss GDP in Q4 was better than the consensus and our own forecasts of 0.1% and we now think economic growth is likely to accelerate further in the coming …
This page has been updated with additional analysis since first publication. Economy re-accelerates in Q4 The pick-up in Turkish GDP growth to 1.0% q/q in Q4 was driven by a rebound in private consumption and suggests that aggressive monetary tightening …
This page has been updated with additional analysis since first publication. RBA will take comfort from spending restraint Notwithstanding the rebound in January, we suspect retail sales will make only modest gains across Q1 as a whole. The softness in …
This page has been updated with additional analysis since first publication. Huge fall in industrial production suggests continued weakness in activity The plunge in industrial production January suggests that GDP will fall yet again this quarter, which …
Economy maintains strong momentum The latest activity data for January suggest that Russia’s economy maintained solid growth at the start of this year, which supports our forecast for above-potential GDP growth of 3.0% over the course of 2024. Retail …
28th February 2024
Sentiment edges lower, but still points to recovery The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally fell in February, but still point to regional GDP growth strengthening in Q1. Economic sentiment …
EC Survey points to stagnant economy and still-high price pressures The EC business and consumer survey for February reinforces the message that the economy is close to recession and that, although price pressures in the services sector eased slightly, …
RBNZ holds rates steady while retaining hawkish bias As had been widely expected, the Reserve Bank of New Zealand left its official cash rate unchanged at 5.50% today. 28 out of 29 analysts polled by Reuters, including ourselves, correctly predicted the …
Inflation will continue to undershoot RBA's expectations The weaker-than-expected inflation print for January all but ensures that the RBA won’t hike rates any further, even if it does retain its hawkish bias at its next meeting in March. And with price …
House price data playing catch up Another small rise in house prices in December suggests the extremely backward-looking data are still capturing a slowdown in price growth following the October peak in mortgage rates. That’s mainly due to the fact …
27th February 2024
Drop in durable goods orders will not derail business investment The sharp drop in durable goods orders in January was mostly driven by volatile transport orders, with the fall in core orders much more moderate. The strengthening in underlying capital …
New MPC delivers large rate hike After a seven-month hiatus, the Central Bank of Nigeria’s (new-look) Monetary Policy Committee stepped up to the plate and hiked interest rates by 400bp, to 22.75%, as it showed greater appetite to tackle the inflation …
Step up in pace of easing will soon be reversed The decision by the Hungarian central bank (MNB) to step up the pace of its easing cycle today, with a 100bp interest rate cut, will probably be followed by further large interest rate cuts over the next few …
Further signs that underlying inflation isn’t easing The breakdown of Brazil’s February mid-month inflation reading of 4.5% y/y showed that core services inflation remained elevated. And while further 50bp cuts in the Selic rate next month (to 10.75%) and …
This page has been updated with additional analysis since first publication. Inflation will jump above 2% in February Inflation at the national level held up better in January than the Tokyo CPI would have suggested, which brings a March rate hike back …
26th February 2024
Rebound in new home sales slightly slower than we were anticipating The sharp fall in mortgage rates at the end of last year helped new home sales regain some more momentum in January. But so far the rebound has been slightly slower than we were …
BoI stands pat as inflation risks remain strong Israel’s central bank opted to leave interest rates on hold at 4.50% today – in contrast to the consensus view for a cut – and the communications continued to emphasise upside inflation risks. Policymakers …
This page has been updated with additional analysis since first publication. German economy still contracting The small rise in the Ifo Business Climate Index in February left the index close to a post-pandemic low and suggests that the German economy …
23rd February 2024
Lower mortgage rates have the desired effect on sales, but it won’t last The sharp fall in mortgage rates at the end of last year was the catalyst for existing home sales rising in January. But borrowing costs have risen again in recent weeks, which in …
22nd February 2024
Set for a weaker first quarter The strong rise in December means that retail sales volumes rose by close to 5% annualised last quarter, supporting the preliminary estimate that GDP growth turned positive again. With sales volumes broadly unchanged in …
Growth pick up is likely to be short-lived Nigeria’s GDP growth rebounded to 3.5% y/y in Q4 but we doubt that this strength will last. Tighter monetary policy, coming alongside the pernicious effects of further weakness in the naira and ongoing struggles …
Inflation drops back, March rate cut in play The drop back in Mexico’s headline inflation rate to 4.5% y/y in the first half of February leaves Banxico on course to begin an easing cycle at March’s Board meeting. That said, the rise in core services …
New governor committed to the tight policy stance The hawkish statement accompanying the Turkish central bank’s decision to leave interest rates unchanged at 45.00% today supports our view that a shift to monetary easing remains some way off and we still …
