This page has been updated with additional analysis since first publication. Economy to remain stagnant The euro-zone economy stagnated in Q4 and we think that it will flat-line in the first half of this year too as the effects of past monetary tightening …
30th January 2024
This page has been updated with additional analysis since first publication. A turning point in credit December’s money and credit figures suggest the transition from interest rates being a drag on activity to being a boost is beginning. This lends some …
Resilient lending in December, but anaemic investment volumes Net lending to commercial property increased for the tenth consecutive month in December, but investment sentiment remained downbeat. Looking ahead, we expect investment to slowly recover over …
The start of a slow recovery The meagre 0.2% q/q expansion in Czech GDP in Q4 confirms that the economy contracted over 2023 as a whole, and we think that this is likely to be followed by tepid growth this year. We maintain our below consensus GDP …
Euro-zone in or close to recession Fourth quarter GDP data published for for France and Spain this morning were a little better than we had anticipated. However, provided there is no revision to the “very preliminary” estimate that the German economy …
This page has been updated with additional analysis since first publication. RBA’s concerns about weak household spending will rise The sharp fall in retail sales in December adds to the case for the Reserve Bank of Australia to loosen policy settings …
Bank of Ghana starts its easing cycle The Bank of Ghana kicked off its easing cycle with a 100bp cut, to 29.00%, today and an improving balance of payments position alongside further falls in inflation mean that more cuts are on the cards over the coming …
29th January 2024
MAS keeps policy unchanged but loosening likely in April. The Monetary Authority of Singapore (MAS) kept monetary policy settings unchanged today which was in line with expectations, but we think weaker incoming activity data and easing concerns about …
Seven months of annualised core inflation at target The December income and spending data confirm that core PCE inflation has been running at an annualised pace in line with the Fed’s 2% target for seven months now. This reiterates the message that there …
26th January 2024
Fall in inflation keeps another 50bp cut on the cards The slightly larger-than-expected decline in Brazilian inflation in the first half of this month, to 4.5% y/y, seals the deal on another 50bp cut in the Selic rate (to 11.25%) at next week’s central …
Plunge in inflation casts doubt on ending of ultra-loose monetary policy The plunge in inflation to well below 2% in Tokyo last month was broad-based, casting doubt on the Bank of Japan’s willingness to end negative interest rates. Headline inflation …
25th January 2024
New home sales regain some momentum New home sales rebounded in December, reversing nearly all of their decline in the previous month when mortgage borrowing costs were much closer to their 8% peak. The 8.0% m/m increase in seasonally adjusted new home …
What landing? Although GDP growth came in hotter than expected in the fourth quarter, underlying inflation continued to slow, with annualised core PCE inflation running at the 2% target in the fourth quarter. The upshot is that an early spring rate cut by …
SARB holds again, replaying inflation risk concerns The South African Reserve Bank resisted responding to last month’s fall in inflation with an interest rate cut, leaving the repo rate unchanged at 8.25% today. The MPC’s message was little changed, …
Today’s decision to leave interest rates unchanged, and the tone of the press release, were as expected. In the forthcoming press conference, Christine Lagarde is likely to push back against expectations for policy rates to start falling in April. It came …
Hiking cycle at an end, rates to stay high The 250bp interest rate hike from Turkey’s central bank (CBRT) today, to 45.00%, marks an end to its tightening cycle. Encouragingly, the communications were relatively hawkish and suggest that policymakers …
Germany starts year in recessionary conditions The fall in the Ifo Business Climate Index in January suggests that Germany started the year as it ended 2023 – in recessionary conditions. We think the economy will contract again in Q1 and forecast zero GDP …
Norges Bank today reiterated that it will leave its policy rate at 4.5% “for some time”. But we think that inflation will fall rapidly this year, so when the Bank does start to cut rates, it will do so more quickly than its forecasts suggest. The decision …
Economic growth in Korea held up better than expected in Q4 but we expect the economy to grow below trend over the next couple of quarters as export growth softens in near term while tight fiscal and monetary policy continue to curtail domestic demand. …
24th January 2024
Bank drops its hiking bias The Bank of Canada’s decision to drop its tightening bias today is the first step toward interest rate cuts. We continue to think that the Bank’s forecasts for the economy are too optimistic, and that inflation will slow faster …
Inflation jumps, February cut in balance The jump in Mexico’s inflation to a higher-than-expected 4.9% y/y in the first half of January was entirely due to a particularly sharp rise in agricultural goods inflation. But it probably means the chances of …
This page has been updated with additional analysis since first publication. Lingering evidence of sticky services inflation may continue to concern the BoE The small rise in the composite activity PMI, from 52.1 in December to 52.5 in January, suggests …
This page has been updated with additional analysis since first publication. PMIs remain consistent with recession January’s euro-zone Composite PMI, published this morning, remained consistent with the economy contracting by around 0.2% q/q. The tick up …
Sharp inflation fall not enough to encourage early rate cuts South Africa’s headline inflation rate fell back further to 5.1% y/y in December but this is unlikely to be enough to convince the Reserve Bank to start an easing cycle tomorrow. November’s …
The central bank (BNM) left the overnight policy rate unchanged (at 3.0%) today and we think monetary policy is set for an extended pause as policymakers attempt to strike a balance between supporting the economy and combating inflation. The decision …
This page has been updated with additional analysis since first publication. Positive signs for this quarter The composite PMI rose for the second consecutive month in January, driven by rises in both manufacturing and services components. And with the …
This page has been updated with additional analysis since first publication. Export growth will be sluggish this year The trade deficit widened in December as import values rose more strongly than export values. But the weakness in net goods trade will be …
This page has been updated with additional analysis since first publication. Inflation continues its rapid descent With inflation falling rapidly, risks are tilted towards the RBNZ cutting rates sooner than Q3, as we’re currently predicting. Consumer …
23rd January 2024
This page has been updated with additional analysis since first publication. More wiggle room for a pre-election splash December’s better-than-expected public finances figures brought some cheer for the Chancellor after the recent run of poor outturns and …
Policy normalisation is in sight Although the Bank of Japan stood pat at its meeting today, we’re sticking with our view that policymakers will soon call time on negative rates. The Bank’s decision to leave its policy rate unchanged at -0.1% was correctly …
This page has been updated with additional analysis since first publication. Recovery continues in Q4 Poland’s retail sales data for December suggest that consumer spending weakened at the end of last year, although the industrial sector held up better …
22nd January 2024
2023 saw the lowest number of existing home sales since 1995 A drop in existing home sales in December confirmed that they fell by 20% y/y in 2023 as a whole to their lowest level since 1995. (See Chart 1.) Lack of supply was the main reason existing home …
19th January 2024
Falling inflation finally providing a boost to confidence The surge in the University of Michigan measure of consumer sentiment in January indicates that recent sharp declines inflation are finally feeding through, although we doubt this signals an …
Retail sales volumes rose strongly last quarter Retail sales were weaker than expected in November, but earlier gains and the strong preliminary estimate for December still suggest that sales volumes grew substantially over the fourth quarter. The latest …
This page has been updated with additional analysis since first publication. Bleak end to a dismal year, but a better 2024 awaits The 3.2% m/m fall in retail sales volumes in December was far worse than expected (consensus forecast -0.5% m/m, CE -1.0% …
GDP declined during the fourth quarter and we expect activity to remain weak in the near term amid elevated interest rates, a cooling labour market, soft foreign demand and subdued commodity prices. Today’s data release marked the second time Malaysia …
This page has been updated with additional analysis since first publication. Inflation will rebound early this year Inflation fell again in December, driven by declines in both fresh food and energy inflation. However, the bigger picture is that inflation …
18th January 2024
Reversal of November spike not a sign of weakness Note: We’ll be discussing our above-consensus forecasts for US house prices and construction in an online briefing on 23rd January at 10:00 EST/15:00 GMT. Register now . Housing starts fell last month …
November’s activity data for South Africa show that while economic headwinds are easing, growth is still very soft. Still, less electricity outages and restrictive fiscal policy should allow for a modest pick-up in growth over this year. Data released …
This page has been updated with additional analysis since first publication Labour market will turn faster than the RBA anticipates With labour market data for December disappointing expectations, we’re more convinced than ever that the RBA will take its …
Market was picking up even before latest slide in mortgage rates The December RICS Housing Market survey showed sales volumes rising and buyer demand recovering even before the further sizeable drop in mortgage rates in January. That’s encouraging for our …
Manufacturing sector stagnating The muted rise in manufacturing output in December shows that the sector continues to struggle, even as consumption growth remains strong. The 0.1% m/m increase in manufacturing output in December meant that the …
17th January 2024
Consumers end the year on a high The 0.6% m/m rise in retail sales in December may have been supported by the unseasonably mild weather, but it still means there is no sign that households are buckling under the pressure of higher interest rates with …
Policy rate left unchanged, central bank hints at cuts later in the year Bank Indonesia left its policy rate on hold at 6.00% at its meeting today, but gave further hints that provided the rupiah continued to hold up well against the US dollar, there …
This page has been updated with additional analysis since first publication. Downward trend stalls, but drop to below 2% still coming in April The unexpected rise in CPI inflation from 3.9% in November to 4.0% in December (consensus and CE forecast 3.8%) …
This page has been updated with additional analysis and charts since first publication . Recovery still shaky China’s economy lost momentum in Q4 according to the official GDP figures. But we suspect that’s because they failed to acknowledge the full …
Core inflation pressures still too strong Although the rise in headline inflation in December was mainly due to gasoline price base effects, the more worrying development is that the CPI-trim and CPI-median core measures both rose by a larger 0.4% m/m. …
16th January 2024
Tepid lending in December closes a sluggish year for activity Net lending on commercial real estate (CRE) by banks was positive again in December, rising by $4.2bn in the month. (See Table 1.) That said, the monthly change was broadly in line with the …
This page has been updated with additional analysis since first publication. Wage growth fading fairly fast Another big drop in wage growth in November supports our view that domestic inflationary pressures are fading fairly fast. But the ongoing …
Temporary rebound in sales volumes The rebound in manufacturing sales in November was broad-based but, with new orders dropping back and the manufacturing surveys weakening in December, that strength is unlikely to be sustained. The 1.2% m/m rise in …
15th January 2024
