Bank under political pressure to abandon Yield Curve Control as inflation surges Incoming Governor Ueda seems to have been given a mandate to end the policy However, existing Governor Kuroda may well spring one last surprise Yield Curve Control is on …
3rd March 2023
Encouraging signs in January CPI and economy has slowed sooner than expected But labour market still tight and wage pressures too strong Risk of higher interest rates elsewhere also keeps pressure on the Bank The fall in CPI inflation in January and …
1st March 2023
Data a touch softer than expected, but not soft enough for RBNZ to back away We still expect rates to peak at 5.5% by the middle of this year Looming recession will prompt looser policy by year-end The incoming data have been a touch softer than the RBNZ …
15th February 2023
Output still below quota, demand will be key OPEC’s monthly report for February did not make any major revisions to its forecasts. That said, the group is clearly worried about both the outlook for global demand and supply from Russia. We think OPEC is …
14th February 2023
Markets’ focus shifting to forward guidance as pace of rate hikes slows Any hints of an end to tightening cycles are still strongly data-dependent But the data will allow for rate cuts sooner than many central banks now imply Now that inflation has …
8th February 2023
MPC to mark end of tightening cycle with 25bp hike to repo rate (to 6.50%) next week Slower growth and inflation could mean MPC is laying groundwork for cuts before long Rate cuts to materialise in early 2024, sooner than consensus expects With …
2nd February 2023
With inflation and price pressures still high, the Riksbank will probably raise interest rates by 50bp next week. However, in contrast to the market, we think this will probably end the tightening cycle and are bringing forward our forecast for a first …
Consumption remains resilient and labour market still very tight With inflation still accelerating, we expect the cash rate to reach 3.85% by April However, sharp slowdown in activity and inflation will prompt rate cuts by year-end The incoming data …
31st January 2023
A 50bp rate hike next week seems to be literally a done deal. The recent strength of the economy means ECB will hike further. Quantitative tightening looks set to accelerate from June. With a 50bp rate hike at next week’s ECB meeting seemingly a done …
26th January 2023
Despite some good news, another 50bps rate hike is most likely Next phase will be MPC pausing to assess influence of higher rates, but we’re not there yet Next big surprise may be that rates are cut by more than investors expect in 2024 Another 50 basis …
Many officials support downshift to 25bp hike at upcoming policy meeting. But officials still see multiple hikes beyond next week. We expect rates to peak just below 5%, with cuts starting later this year. We expect the Fed to downshift to a 25bp rate …
25th January 2023
Economic growth slowing and inflation falling But labour market still tight and inflation expectations too high Bank to drop down to 25 bp hike, but likely to add hawkish guidance The Bank of Canada is set to raise interest rates by a smaller 25 bp …
18th January 2023
OPEC keeps 2023 forecasts unchanged OPEC left its annual supply and demand forecasts broadly unchanged but tweaked the quarterly profile. Like us, the group expects demand to rise faster than supply, which is a key reason why we expect prices to rise over …
17th January 2023
The Norges Bank is one step from ending its tightening cycle. We expect it to raise its policy rate by 25bp next week, to a peak of 3%. After that it is likely to pause while it waits to assess the full effects of the cumulative 300bp of tightening that …
12th January 2023
Widening of tolerance band has done little to improve market functioning Nomination of less dovish Governor would signal Yield Curve Control is on its way out However, renewed slowdown in inflation will prevent policy rate hikes The widening of the …
11th January 2023
Table of Key Forecasts Overview – Inflation is finally falling and we envisage further sharp declines in almost all economies during 2023. (See Chart 1.) In most cases, this disinflation will be more dramatic than either the consensus of economists or …
3rd January 2023
OPEC lowers its oil demand forecasts for H1 2023 OPEC lowered its world oil demand forecasts for the next six months yesterday, but raised its demand forecasts for the following six months. This supports our view that the cut to OPEC+ output quotas from …
14th December 2022
Consumers shedding virus-related caution and inflation surging to multi-decades highs However, global headwinds are strengthening and import prices are slowing Bank would be very brave to start tightening during a global recession Window for policy …
13th December 2022
We expect the Norges Bank to raise its policy rate by 25bp next week, to 2.75%. Signs that the economy is weakening by more than expected might encourage policymakers to nudge down their interest rate forecast. But we still suspect that the policy rate …
8th December 2022
The Bank is most likely to slow the pace of rate hikes to 50bp next week. But we forecast a further 100bp of hikes next year to a peak deposit rate of 3%. The key principles guiding QT will be that it is steady and slow. There is a case for the ECB to …
Shift down from 75bps hike in November to 50bps hike in December MPC starting to think more about the level of rates rather than the pace of rate hikes We think rates will rise to a peak of 4.50%, before being cut sharply in 2024 A shift from the 75 …
The SNB is likely to look through the recent fall in inflation and hike rates by 50bp next Thursday, to 1.0%, in line with market expectations. We now think that this will be the end of the tightening cycle. Recall that the SNB raised its policy rate by …
Pace of tightening to slow with 50bp rate hike Powell to maintain hawkish line; projections may show higher peak in rates But further good news on inflation will prompt a rethink soon The Fed is set to slow the pace of tightening with a 50bp rate hike …
7th December 2022
International efforts to halt and reverse nature loss dovetail with aims to reduce net greenhouse gas emissions by protecting and expanding so-called carbon sinks, such as forests. But this is only one part of the de-carbonisation puzzle and does not …
30th November 2022
Higher interest rates weighing on domestic demand Core inflation pressures eased in October Bank to drop down to 25 bp hike as it balances risks of over- and under-tightening The easing of the three-month annualised measures of core inflation in October …
Labour market remains very tight but consumption moderating and inflation peaking Risks to our above-consensus cash rate forecast are shifting to the downside With GDP growth slowing sharply next year, we still expect rate cuts from late-2023 With …
Pace of tightening to slow as growth comes off boil and inflation passes the peak 25bp hike to repo rate likely next week, and cycle to draw to a close by early-23 Rate cuts could come onto the agenda by late next year With inflation having passed the …
29th November 2022
Global biofuel production unlikely to ramp up anytime soon … … as governments instead prioritise EVs as the future of green transport. As such, elevated food prices shouldn’t be exacerbated by biofuels competing for crops. Global food prices are at …
28th November 2022
With inflation still more than five times the Riksbank’s target, Stefan Ingves may be tempted to end his marathon stint as Governor with another 100bp rate hike. But we think the Bank is more likely to raise rates by 75bp, to 2.5%, while signalling more …
17th November 2022
Broad-based strength in labour market and inflation to prompt 75bp hike next week Rates to peak at 5.0% by April With inflation set to drop back, RBNZ will cut rates in late-2023 With the labour market and inflation going from strength to strength and …
16th November 2022
OPEC supply drops but further falls to come OPEC’s monthly report for October showed a sharp drop in the group’s production, and further falls are likely if members are to abide by their new quotas from November. The OPEC Monthly Oil Market Report for …
14th November 2022
The pace of global monetary policy tightening is slowing But neither history nor central bank guidance give a reliable steer of the future profile Early signs are that the Bank of Canada and US Fed will lead the retreat next year In recent weeks, …
10th November 2022
Rising price/wage expectations will prompt the MPC to hike rates aggressively on Thursday It’s almost 50-50 between a 75bps and 100bps hike, but we are going for 100bps Our forecast that rates will peak at 5.00% remains higher than the consensus …
27th October 2022
The Norges Bank signalled in September that it intended to slow the pace of tightening, implying that it would hike by 25bp at the meeting next week. But with inflation data since then again coming in higher than expected, we think the Bank will opt for …
Stubborn core inflation points to fourth consecutive 75bp rate hike But pace of tightening likely to slow as policy becomes more restrictive Recession and falling inflation to prompt rate cuts by the end of next year Fed officials are gearing up for …
26th October 2022
Bank won’t make a U-turn and will opt for another 25bp hike next week But the upside surprise in Q3 inflation points to a higher peak in interest rates With GDP growth slowing sharply next year, we still expect rate cuts from late-2023 While the …
It is a close call but we think a 100bp hike most likely next week. Further rate hikes will follow, bringing the deposit rate to a peak of 3%. But the hawks’ hopes to shrink the balance sheet will go unfulfilled. The ECB is certain to opt for another …
20th October 2022
Board will lift FY2022 inflation forecasts but signal below-target inflation further ahead High inflation is triggering larger pay hikes but that won’t last Even a hawkish successor for Kuroda would struggle to tighten during a global recession The …
Improvement in headline CPI inflation not matched by core Consumers’ near-term inflation expectations continue to rise Not enough evidence yet for the Bank to slow the pace of its tightening Governor Tiff Macklem has told us that the Bank of Canada …
19th October 2022
Bleak global economic backdrop casts a large shadow over the outlook for oil demand Global oil demand has been relatively income inelastic in the recent past We have pencilled in a stagnation in oil demand over the next year In this Energy Watch , we …
OPEC supply cuts from November may not last long OPEC’s latest report shows that the group still expects demand for its crude oil to increase next year. This bolsters our view that the countries cutting supply from November will eventually reverse course …
12th October 2022
OPEC+ may announce a major cut to oil production quotas tomorrow. But with the current quota not being met, the actual hit to oil supply will be much smaller. We estimate that a 1m-barrel-per-day (bpd) cut to quotas would translate into a 350,000 bpd …
4th October 2022
Inflation persistence has strengthened the drive for higher rates… … while weak exchange rates and fiscal policy concerns add to challenges for some. Peaks will be higher than we had assumed and the risk of policy mistakes has grown. Recent developments …
Resilient activity and faster food inflation point to another 50bp hike next week Inflation set to remain stubbornly high We now expect rates to peak at 4.5% by April 2023; first rate cut only by end-2023 With GDP growth holding up and food inflation …
28th September 2022
Early signs that tighter policy is working but RBA will hike by 50bp next week Consensus catching up to our long-held view that rates will reach 3.6% Absence of wage-price spiral means RBA will be able to loosen policy next year Other analysts are …
27th September 2022
Table of Key Forecasts Overview – There has been growing evidence that pipeline price pressures have eased, underlining our view that inflation will fall sharply next year. Commodity prices and shipping costs have fallen, product shortages have …
23rd September 2022
Renewed inflation rise should seal another 50bp hike next week Pace of tightening to slow thereafter Repo rate to rise a little more than the consensus expects by early 202 We expect the MPC to continue frontloading policy tightening with another 50bp …
22nd September 2022
Next week, we expect the Swiss National Bank, Riksbank and Norges Bank to raise interest rates aggressively. The SNB and the Riksbank both look set to raise rates by 75bp, and we would not rule out a bumper 100bp from the latter. But the Norges Bank is …
15th September 2022
Deadline for applications under COVID-19 lending facility won’t be extended Interest rate targets will remain at current levels as surge in inflation won’t be sustained Bank will be able to ride out renewed pressure on 10-year yield target The Bank …
August CPI data guarantee rate hike of at least 75bp next week New projections may show rates peaking slightly higher We still expect eventual sharp fall in inflation to prompt rate cuts next year The continued strength of core inflation points to …
14th September 2022
