Ukraine’s grain exports will fall sharply in the 2022/23 season Grain prices should fall back to pre-war levels, although these are still historically high But in an extreme scenario, prices would stay much higher for longer Grains prices have skyrocketed …
31st March 2022
Dovish MPC commentary suggests rates will stay on hold next week But inflation is likely to become more of concern over the coming months Repo rate likely to rise by more than the consensus expects this year Since the outbreak of the war in Ukraine, MPC …
30th March 2022
Strong Q1 inflation to overcome RBA’s reluctance to tighten policy Bank to allow bond holdings to shrink in line with maturities, first hike in June Markets are pricing in a peak in rates above 3%, we expect a lower 1.75% With Governor Lowe warming to the …
War in Ukraine will not prevent policy tightening as inflation remains elevated. In the past, tightening cycles have tended to end in recession. But soft landings are achievable and delaying now would increase future risks. The war in Ukraine has worsened …
23rd March 2022
We expect Russia’s coal and gas exports to fall this year, keeping prices high But Russia’s energy exports could fall by much more under a Western embargo In this extreme scenario, there would be limited supply elsewhere to compensate In this Energy Watch …
The Norges Bank will kick off the post-Olsen era next Thursday with a 25bp interest rate hike, to +0.75%, and while we expect it to raise rates three more times this year, the balance of risks is skewed towards it proceeding even faster. Meanwhile, …
17th March 2022
OPEC oil production still falling short Although OPEC oil production rose in February, it remained well below target. And while OPEC left its 2022 oil demand and supply forecasts unchanged, it hinted at revisions due to “geopolitical turmoil”. The OPEC …
15th March 2022
War in Ukraine worsening the tricky mix between rising inflation and slowing GDP growth Rising price expectations to force MPC to raise interest rates by 25bps A tight labour market may mean that rates rise to 2.00% next year The economic consequences of …
10th March 2022
War in Ukraine will lift inflation above 2% But Bank has made clear it will look through transitory, cost-push inflation Kishida will probably appoint a continuity candidate to replace Kuroda While the war in Ukraine will lift Japanese inflation to the …
We expect five 25bp rate hikes this year and another four next year War in Ukraine doesn’t alter policy outlook Fed likely to downplay inflationary impact of energy price surge We expect the Fed to hike interest rates by 25bp at next week’s FOMC meeting …
9th March 2022
ECB will stress caution and flexibility in light of Ukraine war. New ECB forecasts will show lower growth, much higher inflation. Policymakers will still plan to resume normalisation when and if the situation is clearer. At next week’s monetary policy …
3rd March 2022
Bank sent heavy hint that March rate hike was likely Set to accompany 25 bp hike with start of quantitative tightening With inflationary pressures broadening, Bank to follow with another hike in April We expect the Bank of Canada to kick off its …
23rd February 2022
Inflation set to surge further; first rate hike will come in June. High household debt is a concern, but high savings rate means households have buffers. We expect rates to reach 1.75% by mid-2023. We now expect the RBA to start hiking in June in response …
Strong data will keep the RBNZ’s hiking cycle on track The Bank will hike rates to 2.0% by August But we think the Bank will eventually have to reverse course, cutting rates next year The New Zealand economy remained hot at the end of last year. And while …
16th February 2022
OPEC oil production rises in January, but end-2022 targets look ambitious OPEC raised oil output in January, but the shortfall relative to target grew even larger. We never expected OPEC to manage to completely unwind its production cuts this year, but …
10th February 2022
Inflation risks might spur an aggressive policy action similar to that of the mid-1990s. But this would be unusual and there are very good reasons for caution. Even those banks that start out fast will slow the pace before long. Monetary policymakers are …
While the Riksbank is likely to leave the repo rate unchanged at zero next Thursday (10 th February), a hawkish shift is now long overdue. We have pencilled in a 25bp repo rate hike in November 2022, which is ahead of the economic consensus, but there is …
3rd February 2022
We are forecasting a hike in the reverse repo rate next week as Omicron fears fade Repo rate hikes to follow before long as inflation rises above the RBI’s target Repo rate likely to rise by more than the consensus expects this year After months of …
The unfavourable growth/inflation trade-off has worsened We think investors are right to price in an interest rate hike in February to 0.50% And we expect rates to rise to 1.25% by end-2022, further than most anticipate The further surge in inflation …
27th January 2022
Omicron, market sell-off and Ukraine tensions won’t worry the ECB unduly. Lagarde to stress uncertainty over inflation and note rapid house prices increases. We think the Bank will prepare the ground for limited rate hikes next year. The impact of Omicron …
Labour market tightening rapidly, inflation surging Omicron is disrupting activity but will only add to the upward pressure on prices RBA to end QE next week, start hiking in August The rapid tightening of the labour market coupled with the acceleration …
25th January 2022
Inflation was lower than Bank expected in Q4 and Q1 GDP growth is set to be weak Bank nevertheless set to turn more hawkish amid signs of surge in wage growth ahead Bank to use policy statement to tee up rate hike at the next meeting in March Amid growing …
19th January 2022
Fed usually flags start of tightening cycle ahead of time Balance sheet run-down likely to come sooner and be more aggressive than 2017/18 FOMC will have more hawkish tilt until Biden’s nominees are confirmed With many Fed officials now either explicitly …
OPEC under-production likely to continue OPEC continued to raise output by less than its target in December. However, the group is still steadily raising output, which is a key reason why we see the market moving into a surplus this year . The OPEC …
18th January 2022
Norwegian policymakers will keep interest rates on hold, at +0.50%, next Thursday, before resuming their tightening cycle in March. We forecast one rate hike per quarter this year, which is one more than investors have currently priced in over the period. …
13th January 2022
Omicron supply chain disruption won’t lift consumer inflation much Balance sheet to shrink gradually, but that won’t cause tighter monetary conditions Bank still views weaker yen as positive and won’t respond with tightening While Omicron is likely to …
12th January 2022
Table of Key Forecasts Overview – The inflation outlook for 2022 will be dominated by three key themes. First, headline rates will fall owing to a mixture of fading re-opening inflation, falling commodity prices, and base effects dropping out of the …
22nd December 2021
Most central banks will raise interest rates next year. But in some cases, interest rates may not rise by as much as markets are anticipating. And the People’s Bank of China will cut interest rates further. With underlying inflation set to stay …
21st December 2021
Commodity supply shortages have been widespread over the last year or so There doesn’t appear to be a single cause of these shortages But a key theme is that prices are now close to a peak (if they haven’t peaked already) In this Commodities Watch , we …
OPEC continues to over-promise on supply OPEC oil production increased in November, but once again by less than the group’s target. We think OPEC will continue to under-produce, but it should still account for a large share of the world’s oil production …
13th December 2021
Bank to raise 2022 inflation forecast but still predict an undershoot in 2023. Policymakers will keep open possibility of using the PEPP after March. Christine Lagarde will stress uncertainty and need for flexibility. Just a day after we expect the Fed to …
9th December 2021
Emergency lending facility and corporate debt buying scheme to be extended Risks to inflation posed by worst-case Omicron scenario balanced Upside inflation surprise wouldn’t cause Bank to lose control of the yield curve While renewed virus restrictions …
A hike this month does not look likely, but is possible Omicron is unlikely to prompt more QE or negative interest rates Lift off to occur early next year, but rates probably won’t rise as far as investors expect We wouldn’t completely rule it out, but we …
Omicron means that a Norges Bank rate hike next Thursday is no longer as nailed on a prospect as it once was, but we still think that policymakers will decide to raise rates to +0.50%. Meanwhile, although the SNB has let the franc rise in recent weeks, it …
Fed markedly shifts stance, with inflation no longer seen as transitory Taper will be stepped up – asset purchases to end in spring rather than summer We now expect two hikes in 2022, followed by four hikes in 2023 In sharp contrast to the surprisingly …
8th December 2021
Economy a bit stronger than expected but BC floods and Omicron are downside risks Bank to keep forward guidance on policy rate unchanged despite rising wage growth We do not expect the Bank to significantly alter its monetary framework later this month …
1st December 2021
MPC likely to stand pat next week as Omicron fears build Committee likely to announce further measures to drain bank liquidity… …laying the groundwork for policy rate hikes from mid-2022 Whereas many EM central banks have been hiking rates aggressively, …
Economy rebounding rapidly from lockdowns Inflation and wage growth set to surprise to the upside RBA to end QE in August; first rate hike in early-2023 The rapid rebound in activity from the recent lockdowns coupled with a further pick-up in underlying …
30th November 2021
The Riksbank is all but certain to leave its policy settings on hold next week. But against a backdrop of above-target inflation and the broader hawkish shift by policymakers elsewhere, we expect it to dial down the dovishness a bit and to perhaps further …
18th November 2021
Gold is an effective hedge against inflation in the long term But less reliable in the short term We think modest rises in US real yields will be enough to drag on the gold price In this Metals Watch , we revisit the theoretical relationship between the …
17th November 2021
New Zealand economy is running red hot RBNZ will hike by 50bps next week OCR will rise to 2.0% by the middle of next year The New Zealand economy is clearly overheating. Measures of underlying inflation are mostly above the ceiling of the RBNZ’s target …
Policy changes to boost Chinese coal production and curb demand growth in 2022 Economic growth and self-sufficiency to take priority over environmental sustainability But long-term outlook appears more consistent with environmental goals In this Energy …
16th November 2021
Increases in OPEC production to continue to fall short Although OPEC oil production increased in October, it remained significantly below the group’s target. And with little prospect of a meaningful increase in non-OPEC output in the near term, we …
11th November 2021
Investors may be right that the MPC will hike rates in November or December But we think they are wrong to price in rates rising as far as 1.25% by end-2022 Our new forecast is for rates to rise to 0.50% by February, but no higher next year We now think …
28th October 2021
Fed to announce $15bn per month asset purchase taper beginning in November Statement may reveal growing concern about higher inflation… …but we still expect weaker GDP growth to delay rate hikes until 2023 The Fed is set to announce at next week’s FOMC …
27th October 2021
Underlying inflation strongest in years, but wage growth has yet to pick-up RBA to shift forward guidance for first rate hike to 2023 in February, ditch yield target We think the first hike will happen in early-2023 The acceleration in underlying …
ECB will acknowledge upside risk to inflation but say the rise is mostly temporary. The Bank will also push back against expectations for a rate hike next year. The bigger decisions on future asset purchases will be delayed until December. Nobody expects …
21st October 2021
Strong employment gains should be enough for Bank to call time on QE Labour shortages suggest Bank is overestimating the degree of economic slack But with wage growth low, unlikely to bring forward plans for rate hikes We expect the Bank of Canada to call …
New PM Kishida won’t touch yield curve control Weaker yen unlikely to faze Governor Kuroda Near term growth forecasts to be revised down on supply shortages Sitting comfortably with continuity candidate PM Kishida in charge, the Bank of Japan won’t alter …
Even if OPEC raises quotas, there remain doubts about higher supply OPEC moved closer to its collective target output last month. However, it is now clear that if the group were to answer calls to raise output, it would involve abandoning the current …
13th October 2021
