This page has been updated with additional analysis since first publication. Disinflation gathering momentum The RBA is unlikely to pay much heed to the slight pickup in headline inflation in November. In fact, with underlying price pressures showing …
8th January 2025
ISM services index rebounds, but surge in prices paid a worry The rebound in the ISM services index in December will soothe concerns that the services sector is starting to run out of steam. Less positively, the surge in the prices paid index to a nearly …
7th January 2025
Export volumes continue to recover The third consecutive rise in export volumes in November provides further evidence that the economy was gaining momentum at the end of last year. US tariffs could cause the recovery to go into reverse this year, but that …
Exports and imports rebound after port strike disruption The US trade deficit widened again to $78.2bn in November, from $73.6bn, as imports rebounded by 3.4%, outpacing a 2.7% recovery in exports, with shipments in both directions recovering after the …
Construction activity continues to expand despite drag from housing The headline CIPS construction PMI eased to a six-month low of 53.3 in December, from 55.2 in November, although that indicates construction activity is still expanding. The decline in …
This page has been updated with additional analysis since first publication. Sticky services inflation suggests ECB will continue cutting slowly The continued stickiness of euro-zone services inflation means that the ECB is likely to keep cutting interest …
Inflation down in December and to fall sharply this year The fall in Swiss inflation in December suggests that the SNB’s decision to cut by a bumper 50bp in December was fully justified. We think the SNB will cut the policy rate by a further 25bp at its …
This page has been updated with additional analysis since first publication. House prices may be losing a bit of momentum going into 2025 The small fall in the Halifax house price index in December is at odds with the chunky rise in the Nationwide measure …
BoI strikes a slightly more dovish tone as rates stay on hold The Bank of Israel (BoI) left its policy rate on hold again today, at 4.50%, but the accompanying communications struck a slightly more dovish tone and we think that it will be in a position to …
6th January 2025
Higher-than-expected inflation in December Data for Germany and Spain suggest euro-zone inflation was higher than expected in December. However, we still think that inflation is likely to undershoot the ECB’s forecasts later this year causing the Bank to …
A softer end to 2024 December’s batch of PMIs declined for the most part across the Gulf but we doubt that the strength of non-oil activity will be sustained in 2025, particularly in Saudi Arabia and Kuwait. Elsewhere, Egypt’s PMI fell to an eight month …
Manufacturing outlook looking less gloomy Building on the November rebound, the further small rise in the ISM manufacturing index in December suggests the sector is starting the year in better shape after a tough 2024. The 0.9-point rise in the headline …
3rd January 2025
This page has been updated with additional analysis since first publication. Downbeat sentiment continues to weigh on households’ financial decisions November’s money and lending data suggests that households’ caution with their borrowing and saving ahead …
Fall in inflation points to 250bp rate cut this month The larger-than-expected fall in inflation in Turkey last month, to 44.4%, points towards another 250bp interest rate cut, to 45.0%, at the next central bank meeting on 23rd January. The outturn was …
This page has been updated with additional analysis since first publication. Strong end to 2024 and outlook for 2025 better than most expect December’s better-than-expected 0.7% m/m increase in Nationwide house prices means that prices continued to gather …
2nd January 2025
Non-manufacturing sector recovers strongly This report was first published on the 31 st December covering the official PMIs. We added commentary on the Caixin manufacturing PMI on 2 nd January and the Caixin services and composite PMIs on 6 th January. …
31st December 2024
Bank unlikely to cut rates before May The minutes of the RBA’s December meeting struck a slightly dovish tone. However, with the labour market still firing on all cylinders, we doubt the Board will risk loosening policy prematurely. Accordingly, we still …
24th December 2024
Green shoots emerging The stronger-than-expected increase in GDP in October and upward revisions to the prior two months leaves fourth-quarter growth on track to accelerate to 2% annualised, raising the chance of the Bank of Canada pausing at its next …
23rd December 2024
Fall in inflation paves the way for further easing The fall in Mexican inflation in the first half of December, to 4.4% y/y, gives Banxico room to continue to ease monetary policy. But we expect Banxico to continue to cut in 25bp steps, rather than step …
This page has been updated with additional analysis since first publication. Economy is going nowhere, although households in a decent position The downward revision to Q3 GDP from +0.1% q/q to 0.0% (consensus and CE 0.1%) isn’t quite as bad as it looks …
Real economy still strong; as price pressures ease again The 0.11% m/m increase in core PCE prices in November was the smallest gain in six months, although it follows on the heels of two above-target ~0.25% gains in the preceding two months. That …
20th December 2024
Consumption losing momentum again Retail sales volumes were unchanged in October, bringing a run of strong consecutive monthly gains to an end. Moreover, the preliminary estimate that sales values were unchanged in November too suggests this may be the …
A rare dovish surprise from the CBR The unexpected decision by Russia’s central bank to leave interest rates on hold at 21.00% today, rather than hike further, sparks a lot of questions about the central bank’s reaction function – and whether it may be …
This page has been updated with additional analysis since first publication. Little festive cheer for retailers The 0.2% m/m rebound in retail sales volumes in November was slightly worse than expected (consensus +0.5% m/m) and leaves sales on course to …
This page has been updated with additional analysis since first publication. Some good news, but extra revenue-raising measures may still be required Christmas has come early for the Chancellor with borrowing undershooting expectations in November. But …
Surge in headline inflation won’t last, but underlying inflation to remain near target November’s surge in inflation wasn’t a surprise – the Bank of Japan will have known it was on the cards when it decided not to hike rates yesterday. But it should add …
19th December 2024
Banxico cuts, but pace of easing unlikely to be stepped up Mexico’s central bank unanimously decided to deliver another 25bp interest rate cut, to 10.00%, at today’s meeting and the statement flagged that the easing cycle will continue in the coming …
Home sales finally gain some momentum The increase in existing home sales in November, despite rising mortgage rates and weakening mortgage applications the month before, points to stronger demand from cash buyers, possibly driven by investors as election …
Easing on pause as the neutral level approaches The Czech central bank (CNB) left its policy rate on hold at 4.00% today, but we think that the easing cycle will resume before long. We still expect rates to fall towards 3.00% by the end of next year. …
For our more detailed analysis of the Bank's December policy announcement, see here . Dovish hold supports our view that rates will be cut further and faster than market pricing While the Bank of England left interest rates at 4.75% today, it struck a …
Riksbank slows pace of cuts, likely to pause loosening at next meeting The Riksbank cut its policy rate by just 25bp today to 2.5% and it is unlikely to cut at its next meeting in January. Further ahead, we now expect just one more 25bp cut next year, in …
Taiwan’s central bank (CBC) left its main policy rate unchanged today (at 2.0%) and with risks to the inflation outlook skewed firmly to the upside we expect rates to remain on hold throughout 2025. In contrast, the consensus is expecting the central bank …
Low inflation in the Philippines to prompt further rate cuts The central bank in the Philippines (BSP) today cut rates by 25bps (to 5.75%) for the third consecutive meeting and signalled that more rate cuts of the same magnitude are likely over the …
Bank will bring in the new year with a rate hike Although the Bank of Japan left rates on hold for a third consecutive meeting, we think it will resume its tightening cycle before long. The Bank’s decision to leave the policy rate unchanged at 0.25% was …
This page has been updated with additional analysis since first publication. Cratering activity bolsters the case for aggressive easing With activity in freefall, we expect the RBNZ to keep cutting rates aggressively over the year ahead. The 1.0% q/q fall …
18th December 2024
Fed delivers a hawkish rate cut The Fed did cut interest rates by an additional 25bp today, as was largely expected, taking the fed funds rate down to between 4.25% and 4.50%. But the vote was not unanimous and, in a hawkish shift, the new median …
Is the current account deficit the biggest risk to US outperformance? The precarious nature of the outlook for the Federal budget deficit is well appreciated at this stage, but what if the bigger crisis risk is the mounting current account deficit? The …
Post-hurricane rebound marred by multifamily weakness The decline in housing starts in November was entirely due to weakness in multifamily construction, which outweighed a post-hurricane rebound in single-family construction. The rise in permits to a …
Currency concerns to keep Bank Indonesia on the sidelines Bank Indonesia today left interest rates on hold at 6.00%, and given worries about the exchange rate we don’t think it will be until the second half of next year at the earliest that it resumes …
BoT to resume easing cycle next year Thailand’s central bank (BoT) today left interest rates unchanged (at 2.25%), but kept the door open to rate cuts next year. With inflation set to stay very low and growth likely to struggle, we are expecting a total …
This page has been updated with additional analysis since first publication. Further rebound rules out an early Christmas present from the BoE Coming on the back of the stronger-than-expected rise in wage growth in yesterday’s release, the further …
Output falls further, as post-strike aerospace manufacturing recovery delayed The fall in industrial production in November, despite the partial reversal of the earlier temporary disruptions caused by the hurricanes and strike at Boeing, highlights that …
17th December 2024
Underlying inflation pressures building despite downside headline surprise The surprise fall in headline inflation back below the 2.0% target in November reflected steep price falls in a handful of components related to consumer goods, driven by Black …
This page has been updated with additional analysis since first publication. Broad-based strength shows consumer resilience The solid rise in retail sales in November was led by vehicle sales but still showed signs of broad-based strength, with control …
Rates on hold, new MNB Governor will have little scope to cut in 2025 The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think that a rise in inflation in early 2025 will keep rates on hold until at least the new …
This page has been updated with additional analysis since first publication. German economy set to remain weak The Ifo Business Climate Index (BCI) remained deep in recessionary territory in December. While the survey has overstated the weakness in the …
This page has been updated with additional analysis since first publication. Rebound in wage growth will add to BoE’s inflation concerns The big rise in regular private sector pay growth in October will increase the Bank of England’s concerns about a …
This page has been updated with additional analysis since first publication. PMIs raise concerns over the prospect of stagflation Despite the composite PMI staying at 50.5 in December, at face value it’s consistent with the 0.1% q/q rise in real GDP in Q3 …
16th December 2024
This page has been updated with additional analysis since first publication. PMIs strengthen the case for looser monetary policy December’s PMI survey for the euro-zone suggests that the economy is contracting and that price pressures remain largely under …
An unexpected loss of momentum China’s economy appears to have slowed last month, despite tailwinds from recent policy easing. Growth still looks on course to pick up this quarter, but the disappointing November data underscores the challenge policymakers …
