More ECB rate hikes to come Today’s 50bp rate hike came alongside hawkish comments which are consistent with our view that the deposit rate will peak at 3%, significantly higher than the consensus forecast and a touch above what was priced into the …
15th December 2022
Easing off the brakes, but hikes may not halt until rates hit 4.50% The Bank of England followed the Fed by slowing the pace of interest rate hikes from 75bps in November to a 50bps hike today as widely expected, which took rates from 3.00% to 3.50%. But …
This report has been updated with additional analysis, table and chart of key figures. Inflation on the way down Saudi inflation ticked down to 2.9% y/y in November on the back of a drop in food inflation. We think the headline rate will continue to fall …
SNB hikes by 50bp, hints at more to come The SNB’s 50bp rate hike, to 1.00%, was in line with expectations but, more importantly, the Bank also raised its medium-term inflation forecast slightly, hinting that policymakers believe future hikes may be …
Norges Bank tightening nearly over, but pivot a long way off Today’s 25bp rate increase by the Norges Bank, to 2.75%, takes it very close to the end of its tightening cycle. But we think the Bank is a long way from pivoting to loosening policy. The …
End of the tightening cycle Taiwan’s central bank (CBC) today raised its main policy rate by 12.5bps (to 1.75%) but with inflation easing and growth set to struggle we expect this hike to have marked an end to the tightening cycle. Today’s decision was in …
Tightening cycle nearing an end The central bank in the Philippines (BSP) today raised its main policy rate by a further 50bps (to 5.50%), but with Governor Felipe Medalla sounding more dovish than expected on inflation, we think the tightening cycle will …
The downturn has deepened and reopening won’t reverse it overnight The disruption from virus outbreaks intensified in November, with retail sales, investment spending and industrial output all contracting by the most month-on-month since the Shanghai …
Labour market strength won’t last much longer The continued strength in Australia’s labour market is consistent with our view that the RBA will hike rates more sharply than most anticipate over the coming months. The 64,000 rise in employment in November …
Exports downturn has begun The trade deficit narrowed substantially in November and has further scope to do so again in December. But with the global downturn weighing on external demand next year, further progress towards a more balanced goods trade …
Economy will fall into recession in 2023 The huge jump in Q3 GDP will prompt the Reserve Bank of New Zealand to press ahead with another 75bp hike in February, adding to our conviction that a sharp downturn lies ahead. The 2.0% q/q in production GDP was …
14th December 2022
The Fed strikes back Despite the increasingly compelling evidence that core inflation will fall sharply next year, the Fed simply doubled down on its recent hawkishness. As expected, the Fed issued an identical statement and raised interest rates by a …
Inflation passed its peak, slower rate hikes more likely The fall in CPI inflation, from 11.1% in October to 10.7% in November (consensus 10.9%, BoE 10.9%, CE 11.1%,), means that inflation has peaked and the fall in core inflation from 6.5% to 6.3% will …
Services race ahead while manufacturing struggle Today’s Tankan survey suggests that while the services sector is going from strength to strength, the outlook for the manufacturing sector continues to worsen. The Tankan’s headline index for large …
Stick a fork in it, inflation is done The Fed will still hike its policy rate by 50bp tomorrow and the new projections could show the peak above 5%, but the 0.2% m/m increase in core consumer prices in November provides strong support to our long-held …
13th December 2022
Still a long road ahead to restoring debt sustainability The news that Ghana has secured a $3bn staff-level agreement with the IMF will go some way to easing the country’s economic crisis, but the government still needs to clear a number of hurdles to put …
Little appetite for borrowing Credit growth has now reversed all of its modest acceleration over the past year, a clear sign that monetary easing has failed to gain traction due to virus disruption and waning confidence among households and firms. …
12th December 2022
Rebound in October likely to be a blip The larger-than-expected 0.5% m/m rise in GDP in October was mostly due to the rebound after September’s extra bank holiday. But it could tilt the Bank of England towards delivering another bumper 75bps interest rate …
Sentiment remains at recessionary levels The small rebound in the University of Michigan index to 59.1 in December, from 56.8, indicates that the slump in gasoline prices and recovery in the stock market is supporting consumer sentiment. But the index …
9th December 2022
Inflation likely to remain subdued even amid reopening Consumer price inflation dropped to its lowest in eight months in November and producer price inflation stayed at a 23-month low. The shift away from zero-COVID could put some upward pressure on …
This page has been updated with additional analysis, chart, and table of key figures. Jump in inflation a sign of things to come; tightening still on the agenda Egypt’s CPI inflation rate jumped from 16.2% y/y in October to 18.7% y/y in November – its …
8th December 2022
Net trade should boost GDP growth in Q4 The October trade data point to a huge boost from net trade to Q4 GDP growth but we suspect that a further fall in exports will moderate that contribution. The decline in the trade surplus, from $12.4bn in September …
Slowing growth keeps the NBP on hold Poland’s central bank (NBP) stuck to its script today as it left interest rates on hold at 6.75% for the third consecutive meeting. With inflation nearing a peak and the economy slowing, we think the tightening cycle …
7th December 2022
The end of the tightening cycle? The Bank of Canada delivered a somewhat dovish 50 bp policy rate hike today by softening its explicit forward guidance that interest rates will need to rise further. We would not rule out a final 25 bp interest rate hike …
German industrial output resilient but still set for contraction German industrial production once again held up better than expected in October. But this resilience was driven partly by a recovery in construction which tends to be volatile. We expect …
RBI slows the pace of tightening The RBI slowed the pace of monetary tightening with a 35bp hike to the repo rate (to 6.25%) and, with headline inflation set to ease further and growth entering a softer patch, we think the central bank will call a halt to …
Exports set to shrink further as global recession looms Chinese exports contracted year-on-year in November by the most since the start of the pandemic and imports dropped at the fastest pace in 30 months. We expect outbound shipments to fall further over …
GDP growth will come to a standstill next year The decent rise in Q3 GDP probably marks the last hurrah for Australia’s economy as tighter monetary policy and falling real incomes weigh on spending. The 0.6% q/q increase in Q3 GDP was a touch weaker than …
Export volumes struggling despite boost from agricultural sector The essentially unchanged level of export volumes in October, despite a big boost from higher agricultural exports, suggests that the sector is beginning to struggle amid weaker external …
6th December 2022
Deficit widens on shift in pharmaceutical trade The trade deficit widened to $78.2bn in October, from $74.1bn, as the weakness in global demand began to weigh on exports, which declined by $1.9bn. At the same time, imports increased by 2.4bn, as a further …
RBA not backing away from rate hikes just yet The RBA today hiked the cash rate by 25bp as widely anticipated and while the statement was marginally less hawkish, we’re sticking to our view that the Bank will lift rates to 3.85% by April. The Bank’s …
Regular earnings growth to maintain quicker pace Labour cash earnings increased by a slower 1.8% in October due mostly to a much smaller gain in volatile bonus payments. Regular earnings held steady due to high inflation and the boost from the reopening, …
5th December 2022
Activity still holding up, for now The rebound in the ISM services index to 56.5 in November, from 54.4, leaves it consistent with the recent consumption data in pointing to decent activity growth in the fourth quarter. But we suspect that resilience will …
This page has been updated with additional analysis and chart. Gulf non-oil sectors ending 2022 on a strong note November’s batch of PMIs provide further evidence that the non-oil sectors in the Gulf economies are rounding off the year on a strong …
Unemployment rate declines despite slowdown in hiring The slowdown in hiring in November was not enough to prevent a renewed decline in the unemployment rate, as the labour force contracted. The Bank of Canada will be more encouraged by the fall in the …
2nd December 2022
Strength in employment & wages won’t prevent Fed from slowing rate hike pace The resilience of the labour market and the resurgence in wage pressures don’t change our view that core price inflation is going to fall more rapidly than the Fed believes, and …
Index slips below the 50 mark The decline in the ISM manufacturing index to 49.0 in November, the lowest reading since the early stages of the pandemic, from 50.2, leaves it at a level consistent with a stagnation in broader economic growth. The decline …
1st December 2022
Real consumption boosted by motor vehicle rebound The strong 0.5% m/m increase in real spending in October illustrates that consumers are not buckling under the weight of higher interest rates, at least not yet. That gain follows a 0.3% m/m increase in …
More signs of weakness in industry The Caixin manufacturing PMI edged up in November but remained weak. Taken together with the official survey published yesterday, the surveys suggest that downward pressure on industrial activity intensified last month. …
Strength in business investment won’t last Private investment probably rebounded last quarter and while firms’ projections at face value point to a further acceleration over the remainder of the financial year, the figures are consistent with a slowdown …
Peak headline inflation won’t stop ECB hiking Euro-zone headline inflation may now be past its peak but with core inflation unchanged in November and likely to stay well above 2% throughout next year, we expect the ECB to press on with another 50bp or …
30th November 2022
Thailand: gradual tightening cycle to continue The Bank of Thailand hiked interest rates today by a further 25bps (to 1.25%), and reiterated that it is likely to continue to tighten policy gradually over the coming months. The decision was correctly …
COVID disruptions deliver a further hit to activity The official PMIs add further evidence of another large blow to services activity as virus disruptions intensified this month. The hit to industry looks to have been more modest. But downside risks …
Inflation may peak below 8% in Q4 We wouldn’t read too much into the drop in the Monthly CPI Indicator in October because the figures don’t cover the entire CPI basket, but the data suggest that inflation is about to peak. Headline inflation dropped …
Production to rebound in last two months of 2022 Industrial production saw a steeper contraction in October but firms' output forecasts for November and December point to a rebound. Industrial production contracted by a sharper 2.6% m/m in October, …
Domestic demand contracts for first time since 2021 The stronger-than-expected gain in third-quarter GDP tips the odds slightly toward another 50 bp interest rate hike from the Bank of Canada next week. But, with domestic demand contracting for the first …
29th November 2022
Small improvement in sentiment and fall in headline inflation The small increase in the EC Economic Sentiment Indicator (ESI) for November suggests that prospects for the euro-zone economy are no longer deteriorating. While we still expect a recession, it …
Higher interest rates are weighing on credit and attracting savings October’s money and credit figures reveal further signs that households continue to remain cautious and higher interest rates are starting to weigh on the economy. The £0.8bn rise in …
Soaring inflation weighing on retail sales Retail sales values barely grew in October from September and soaring inflation points to risks that growth will remain muted this quarter. Growth in retail sales values slowed sharply from 1.5% m/m to 0.2% m/m …
