Economic data flash mixed signals The big news out of Australia this week was the strong rise in consumer prices in August. Moreover, with underlying price pressures showing few signs of relenting, we’ve revised up our forecast for the RBA’s terminal cash …
29th September 2023
Will December’s election pave way for EGP move? Egypt’s National Election Authority confirmed this week that the presidential election will take place in December. As we highlighted , this adds to reasons to think the shift to orthodoxy will remain on …
28th September 2023
Given clearer signs of economic weakness in recent weeks, we think the surprise increase in underlying inflation pressures in August means the Bank of Canada is more likely to keep interest rates at their current level for longer than to raise rates …
25th September 2023
Amid the flurry of central bank announcements, the Fed doubling down on “higher for longer” proved to be enough for the greenback to eke out small gains against most other currencies, taking the DXY index to a tenth consecutive weekly rise. While comments …
22nd September 2023
Nigeria's fuel subsidy unexpectedly returns The recent pick-up in oil prices will provide welcome hard currency income for Nigeria. But high oil prices and a weak naira also signal the return of the fuel subsidy. As a major oil exporter, Nigeria benefits …
Brazil’s services inflation: how soft? The big economic event this week was the central bank meeting in Brazil on Wednesday at which the Selic rate was lowered by another 50bp (to 12.75%). As we noted in our response , the key messages in the statement …
Most commodity prices fell this week as the Federal Reserve left the door open to another interest rate hike before the end of the year , and indicated that rates will remain higher for longer. However, we are sticking with our view that US inflation will …
This week’s news that interest rates are probably at their peak (see here ) and the news that public borrowing in the current fiscal year is £11bn below the Office for Budget Responsibility’s forecast has raised the pressure on the Chancellor to deliver …
We do not expect the recent rise in oil prices to cause the ECB to hike rates, as the impact on headline inflation will be limited. Since the end of June, the Brent crude oil price has risen by almost 30% to around $94pb, predominantly due to cuts in …
Poland-Ukraine relations show some cracks The dispute that escalated this week between Poland and Ukraine shows how Poland’s ruling PiS party is hoping to capitalise on nationalism, and public fatigue over the war, ahead of elections next month. Poland, …
The new projections published by the Fed this week signalled that officials are fully onboard with the idea of interest rates staying ‘higher for longer’, but that is based on forecasts for real economic growth and inflation which we believe are …
Loose fiscal policy to support Thai growth Thailand’s new government this week unveiled a budget for fiscal year 2024 (Oct. 2023 – Sep. 2024) which envisages a significant loosening of policy. The centrepiece is a 10,000 baht (US$275) cash handout to all …
Efforts to boost foreign investment are failing In March, the government launched a year-long “Invest in China” campaign to shore up sagging foreign investment. As part of these efforts, it set out 24 measures in August to improve the business environment …
Gov’t achieves long-stated aim of bond inclusion Almost a year on from a high-profile snub , JP Morgan announced on Friday that it would be including Indian local-currency bonds in its GBI-EM Global Diversified Index for the first time. Inclusion will …
Higher inflation lowering deficit and debt/GDP Even though inflation excluding fresh food and energy remained stubbornly high at 4.3% in August, the Bank of Japan didn’t drop any further hints that it might tighten policy anytime soon at its meeting …
Second-round effects set to be small The minutes of the RBA’s September meeting revealed that the Bank kept discussing another 25bp rate hike. One argument in favour was that the recent rise in petrol prices could make the process of returning to target …
Is Egypt set for the polls before year-end? Reports that Egypt’s presidential election, originally scheduled for 2024, could be held before the end of this year may help to explain the recent policy paralysis with regards to the pound. The National …
21st September 2023
Another week, another rise in the DXY index, which at the time of writing is on track for a ninth consecutive weekly rise. Continued robust activity data in the US and the ECB signalling the end of its rate hiking cycle accounts for the greenback’s …
15th September 2023
South Africa’s fiscal rule talk Reports emerged this week that, in a bid to keep investors on side amid a worsening budget position, South Africa’s Treasury is proposing to establish a new “fiscal anchor”. Even so, a looser fiscal stance still seems an …
Argentina: Devaluation triggers inflation jump This week’s inflation data from Argentina made for a grim reading. Consumer prices rose by 12.4% m/m in August on the back of last month’s devaluation , pushing inflation to 124% y/y – the highest rate since …
We were not surprised that European Commission (EC) President Ursula von der Leyen announced in her State of the Union address this week that the EC will launch an anti-subsidy investigation into electric vehicle (EV) imports from China. Indeed, we had …
A recent poll suggests that Canadians are growing sceptical of the government's high immigration targets. Whether policy shifts or not, it is inevitable that net immigration will eventually slow from record rates, but there is no sign of that yet. Opinion …
Core inflation still on firm downward trend Although core CPI increased by 0.3% m/m in August (or 0.28% to be precise), up slightly on the 0.2% m/m gains (both 0.16%) in the preceding two months, the rise last month was still smaller than the average gain …
Russia seeking closer friendship with North Korea The strengthening relationship between President Putin and North Korean leader Kim Jong Un was on show this week but we doubt the discussions will yield any meaningful benefits for Russia’s economy or …
Note: We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm BST on Thursday 21st September. (Register here .) We’ve been surprised by the resilience of the labour market over the past year. More recently, …
Property controls have been substantively relaxed in recent weeks. The big announcements came on the last day of August. But there has since been plenty of easing at the local level too. At least ten large cities have lifted all home purchase …
G20 summit exceeds low expectations T he G20 managed to deliver a joint statement at its summit in New Delhi, which was deemed as something of a foreign policy triumph for Prime Minister Modi given the uncertainty ahead of the event. This owed much to …
Hold likely in Philippines despite jump in inflation The scheduled highlights of the coming week are monetary policy meetings in Indonesia, Taiwan and the Philippines. While Indonesia and Taiwan are very likely to leave policy settings unchanged, the …
Wage growth will remain contained Data published by the Fair Work Commission on Monday showed that average annualised wage increases under new enterprise bargaining agreements (EBAs) soared to 4.4% in the two weeks leading up to August 11 th . That meant …
Ueda signals tighter policy Bank of Japan Governor Ueda’s comments over the weekend that the Bank may have enough information by the end of this year to call time on negative interest rates sent 10-year JGB yields above 0.7% for the first time since 2014. …
All eyes on the CBE The Central Bank of Egypt (CBE) resumed its tightening cycle in August and, with inflation rising further, we expect interest rates to be hiked again. More than anything, though, investors will be looking for any shift in the exchange …
14th September 2023
The US dollar looks set to end the week higher against nearly all other major currencies. Remarkably, the DXY Index is set for an eight consecutive weekly rise, something that has rarely occurred since 1990. (See Chart 1.) And while that index is …
8th September 2023
In his speech this week, Governor Tiff Macklem sounded much more confident that the Bank will be able to meet its 2% inflation target. The latest labour market and local housing data suggest that may still be possible without a recession. Policy rate has …
Policy mistakes risk being repeated in Nigeria Recent interventionist actions from Nigeria’s central bank and government have heightened our fears that growing political pressures are undermining policy reforms. This could see Nigeria’s inflation and …
Higher energy prices not a game changer for the Fed Crude oil prices up, wholesale gasoline down? The further rise this week in the WTI crude oil price to a 10-month high of $87 a barrel, from a recent low of less than $70 in late June, has raised …
Sheinbaum follows in Amlo’s footsteps Former Mexico City mayor Claudia Sheinbaum was unveiled as the ruling Morena party’s presidential candidate this week and with her facing off against the main opposition candidate Xóchitl Gálvez in next June’s …
It’s no surprise that the reverberations from the revisions to GDP announced by the Office for National Statistics (ONS) last week continued into this week because the upward revisions were so big. As we noted at the time, we estimate that the level of …
Christine Lagarde and her colleagues will have some new and gloomy data releases to contemplate when they gather in Frankfurt next week. First, revised data published on Wednesday show that the euro-zone eked out only a 0.1% increase in GDP in Q2 as …
The decision by the National Bank of Poland (NBP) to kick off its easing cycle this week with a much larger-than-expected 75bp interest rate cut has been heavily criticised, and suggests to us that policymakers are underestimating the challenge of …
Geopolitics loom large over New Delhi showcase Following the success of the Chandrayaan-3 mission to the south pole of the moon in August, this weekend’s G20 summit in New Delhi will undoubtedly be presented as another foreign policy triumph by the BJP as …
Headline inflation jumps in August The long and steady decline in inflation across Emerging Asia came to an end last month, with headline inflation picking up in all six countries that have so far reported August price data. (See Chart 1.) Chart 1: …
Huawei's chip breakthrough The launch of Huawei’s new phone, the Mate 60 Pro, has sparked a debate over the effectiveness of US export controls that were tightened last year, restricting the sale to China of machinery needed to produce sub-18nm chips. The …
Consumption set to slow further The 0.4% q/q rise in Q2 GDP was a touch stronger than the RBA’s August estimate of 0.2%, but the more important question is what the figures mean for the outlook for the economy over the coming quarters. On past form, the …
MoF signaling some concern over weaker yen As the yen weakened to nearly 148 against the dollar this week, the government has signalled its readiness to intervene in foreign exchange markets to stop its slide. Masato Kanda from the Ministry of Finance …
Saudi oil output cut rollover a significant GDP hit Earlier this week Saudi Arabia confirmed that it will extend its additional voluntary 1mn bpd oil output cut until the end of this year which will result in a significant hit to economic growth this …
7th September 2023
A run of soft US labour market data has left the dollar on track to end the week slightly lower against most major currencies, threatening to break the DXY index’s six-week winning streak despite a strong rebound in the wake of the ISM manufacturing …
1st September 2023
Bank to pause amid rising recession risks The surprise second-quarter contraction in GDP was partly due to the wildfires but, even without that damage, growth would have been very weak. With the August CFIB Business Barometer showing further concerning …
IMF losing its patience with Argentina The IMF’s fifth and sixth reviews (which were combined) of Argentina’s $44bn programme out late last Friday make for pretty depressing reading. The Fund slashed its 2023 GDP growth forecast to -2.5% (from +2%) and …
Rising gas prices doesn’t mean energy crisis is back Wholesale European natural gas prices jumped more than 20% in the early part of this week and have been highly volatile recently, but this doesn’t mean the energy crisis in the region is coming back to …
Most commodity prices rose this week (see Chart 1) after data showed that US labour market conditions are easing (see here and here ), lowering expectations for US interest rates and weakening the dollar. Chart 1: S&P GSCI Sub-Indices (2 nd Jan. 2023 = …
