Interest rate cuts to support growth in 2025 GDP growth in the Philippines picked up slightly in the final quarter of last year, and we expect decent growth in 2025 as interest rate cuts help offset the drag from weaker exports and tighter fiscal policy. …
30th January 2025
Copom sticks to its promise Brazil’s central bank delivered on its pledge to deliver another 100bp hike to the Selic rate, to 13.25%, and another 100bp increase at March’s Copom meeting is all but certain. For now, we are sticking with our view that that …
29th January 2025
Fed moves to the sidelines The Fed left its key policy rate unchanged at between 4.25% and 4.50% and the accompanying statement suggests the FOMC is happy to remain on the sidelines, as it awaits more clarity on the potentially stagflationary mix of …
Bank cuts by 25bp as 25% tariff threat hangs over the economy With the economy doing better recently, the Bank of Canada’s decision to cut by 25bp today might have been a much closer call were it not for the looming threat of US tariffs. Any tariffs could …
This page has been updated with additional analysis Riksbank makes final rate cut of the cycle We think that the Riksbank will keep its policy rate at 2.25% for the foreseeable future after delivering a 25bp cut today. While there is a lot of uncertainty, …
Spain’s strong growth showing no signs of abating The 0.8% q/q increase in Spain’s GDP in Q4 2024 was a bit stronger than expected as the economy brushed off the negative effects of the flooding in Valencia. The economy is likely to continue to increase …
Soft CPI data paves the way for RBA to cut in February With underlying inflation on track to enter the RBA’s 2-3% target band this quarter, we now expect the Bank to begin its easing cycle at its next meeting in February. The 0.2% q/q rise in consumer …
Housing market continues to cool The modest rise in house prices in November adds to the sense that the housing market is experiencing a bit of a slowdown amid weak buyer demand and gradually rising supply. We think this trend has a bit further to run, …
28th January 2025
Fourth-quarter business equipment investment set to decline The fall in durable goods orders in December was due to the volatile transport component, whereas core and underlying capital goods orders both rose. While real underlying capital goods shipments …
MNB waiting patiently to resume the easing cycle The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think that the inflation backdrop will result in less easing over the rest of the year than most expect. Today’s …
Newbuild demand remains a bright spot in otherwise frozen market The 3.6% increase in new home sales in December wraps up a solid year for newbuild demand in an otherwise stagnant housing market, with sales up nearly 3% over 2024 as a whole. We expect new …
27th January 2025
German economy starts year on weak footing The Ifo Business Climate Index (BCI) remained in contractionary territory in January which supports the consensus and our own view that that Germany will eke out only a small expansion in GDP this year. The …
Small rise in sales does not mark beginning of the recovery The small rise in existing home sales in December reflects deals that came together in September and October, when mortgage rates hit a nadir of 6.2%, getting across the line. Given the recent …
24th January 2025
Inflation eases, but Copom still set to deliver 100bp hike next week Brazil’s headline inflation rate eased to 4.5% y/y in the first half of January, but signs that underlying price pressures continued to build mean that Copom will press ahead with …
This page has been updated with additional analysis since first publication. Stagflation concerns remain at the start of 2025 Despite the small rise in the composite activity PMI from 50.4 in December last year to 50.9 in January, at face value it is …
This page has been updated with additional analysis since first publication. Growth remained sluggish in January We expect data released next week to show that the euro-zone economy grew by only 0.1% q/q in Q4, and January’s PMIs point to a similarly poor …
Strong exports and investment supporting the economy Taiwan’s economy picked up in Q4, and we expect GDP growth to remain robust over the coming quarters, helped by continued strong growth in information and communication technology exports. The advance …
Bank of Japan will lift policy rate to 1.25% next year The Bank of Japan hiked its policy rate to 0.5% today and we think it will lift it to an above-consensus 1.25% by the middle of next year. The Bank’s decision to resume its tightening cycle with a …
MAS loosens policy, further easing likely amid low inflation Singapore’s central bank loosened monetary policy today and with inflation likely to remain low and economic growth soft, we expect further easing in the coming quarters. The MAS conducts …
Flash PMI points to pick-up in activity this quarter The continued rise in the composite PMI to its highest point since Q3 last year supports our view that activity will pick up again this quarter. Today’s flash estimate showed that the manufacturing PMI …
Strength in underlying inflation points to further tightening The acceleration in headline inflation and strength in underlying inflation in December should add to the Bank’s confidence that it can resume rate hikes today and over the coming months. In …
23rd January 2025
The news from Davos that President Trump will “ask Saudi Arabia and Opec to bring down the cost of oil” is certainly in keeping with his desire for lower gasoline prices and his clear intention to use energy as leverage over Russia to end the war in …
Heading for another strong quarter On the surface, the 0.4% decline in retail sales volumes in November looks worrying, but that fall partly reflects households delaying purchases ahead of the December GST holiday. Encouragingly, November’s drop appears …
Easing inflation makes February cut highly likely The fall in Mexican inflation in the first half of January, to 3.8% y/y, means that Banxico is likely to continue its easing cycle next month. But with the Fed set to pause its pause its cutting cycle and …
250bp cut likely to be follow with another in March The 250bp interest rate cut by Turkey’s central bank (CBRT), to 47.50%, was accompanied by cautious language in the statement. But given signs that underlying inflation pressures are easing , we think …
Norges Bank to start cutting in March Today’s policy announcement confirms that Norges Bank is likely to start cutting interest rates at its meeting in March. We think it will then loosen monetary policy a little more quickly than its latest projections …
Korea’s economy continued to struggle in Q4 and we suspect that the weakness in activity could persist in the near term due to the ongoing political crisis and the bleak outlook for the construction sector. Data released today show that GDP growth …
22nd January 2025
Inflation edges up but SARB to continue with cuts in 2025 The smaller-than-expected rise in South Africa’s headline inflation rate, to 3.0% y/y, in December, combined with the recent recovery in the rand, supports our view that the SARB can continue with …
Rates on hold (again), prolonged hold likely 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 …
This page has been updated with additional analysis since first publication. Figures not as bad as they appear but challenges remain Against a backdrop of slowing GDP growth and high interest rates, December’s overshoot in borrowing is further …
This page has been updated with additional analysis since first publication. With price pressures continuing to abate, the RBNZ should have no qualms about cutting rates by another 50bp at its meeting next month. The 0.5% q/q rise in consumer prices last …
21st January 2025
Concerning signs despite GST-related fall in headline inflation The small fall in headline inflation to 1.8% in December is not as encouraging as it looks, with the details suggesting that a higher proportion of the GST holiday was captured by the price …
This page has been updated with additional analysis since first publication. UK wage growth rebounds further, but there are signs of cooling further ahead While the further rise in regular private sector pay growth in November will cause the Bank of …
Manufacturing output rebounds The strong rise in industrial production in December is consistent with the recent improvement in the survey evidence. However, we do not think this marks the beginning of a sustained recovery in the manufacturing sector. The …
17th January 2025
Jump in starts consistent with growing optimism among builders The large rebound in housing starts and continued resilience of building permits in December provides some support to our forecast that starts will remain solid in the first half of the year. …
Tighter fiscal policy to weigh on growth Economic growth in Malaysia softened in Q3 and we expect a year of fairly subdued growth ahead as tight fiscal policy weighs on demand. According to the advanced estimate published today, GDP growth eased to 4.8% …
This page has been updated with additional analysis since first publication. Disappointing Q4 not a sign of things to come December’s 0.3% m/m fall in retail sales volumes was worse than expected (consensus forecast +0.4% m/m, CE 0.0% m/m) and rounded off …
Fiscal-driven recovery will be short-lived The economy ended 2024 on a stronger note, thanks to tailwinds from recent policy easing. Increased fiscal spending should continue to provide a near-term prop to activity, but this won’t prevent growth from …
Strong control group bodes well for Q4 GDP The 0.4% m/m increase in retail sales in December was a little weaker than expected, with the consensus forecast as high as 0.6%, but this was actually a strong report that boosts our fourth-quarter GDP growth …
16th January 2025
NBP keeps rates on hold, probably for the whole year The National Bank of Poland (NBP) left its policy rate on hold again today, at 5.75%, and the inflation backdrop is likely to prevent the restart of the easing cycle for some time. We don’t expect …
Economy still at risk of contracting in Q4 While the smaller-than-expected 0.1% m/m rebound in GDP in November (consensus and CE forecast +0.2% m/m) offset the 0.1% m/m decline in activity in October, it’s clear that the economy has a bit less momentum …
Interest rates on hold, but BoK to resume easing cycle soon The Bank of Korea today left its main policy rate unchanged at 3.00%, but we doubt it will be long before the central bank resumes its easing cycle. The decision was correctly predicted by just …
This page has been updated with additional analysis since first publication. Tight labour market bolsters case for RBA to stay put Although we expect the labour market to cool in earnest over the course of this year, risks to our forecast that the …
Inflation continues to accelerate The rise in Russian inflation to 9.5% y/y in December is likely to be followed by an increase to more than 10% early this year. The central bank has set a high bar for further tightening but we think the balance remains …
15th January 2025
Core CPI consistent with soft gain in core PCE The 0.23% m/m increase in core CPI in December appears consistent with a below-target 0.14% m/m increase in the Fed’s preferred core PCE deflator measure. Although that would leave core PCE inflation …
Manufacturing recovery stalls The rise in manufacturing sales in November was entirely due to higher prices, with sales volumes unchanged. While the recovery in activity took a breather, the 1.8% m/m rise in new orders and increase in the S&P Global …
Easing cycle to stay on pause amid inflation and fiscal risks The National Bank of Romania (NBR) left its policy rate on hold again today, at 6.50%, amid continued concerns about the inflation outlook and the direction of fiscal policy post-election. We …
Increase in inflation may push CBN to deliver one last 25bp hike The further rise in Nigeria’s headline inflation rate, to 34.8% y/y in December, raises the risk that the central bank pushes ahead with one last interest rate hike at their next meeting in …
This page has been updated with additional analysis since first publication. Outlook weak despite rise in production The small uptick in euro-zone industrial production in November will be of little relief to the beleaguered sector. Surveys suggest that …
Germany still in the doldrums Preliminary GDP data for Germany suggest there is still no sign of the country exiting stagnation, with GDP down slightly in both Q4 and in 2024 as a whole. We forecast a very small cyclical recovery in 2025, but even that …
