Minor improvements in all sectors, but very gradual recovery ahead Having deteriorated for the best part of 2023, sentiment over all-property occupier demand and rents improved in Q4. However, the balances remain negative, pointing to subdued demand and …
25th January 2024
SARB holds again, replaying inflation risk concerns The South African Reserve Bank resisted responding to last month’s fall in inflation with an interest rate cut, leaving the repo rate unchanged at 8.25% today. The MPC’s message was little changed, …
Today’s decision to leave interest rates unchanged, and the tone of the press release, were as expected. In the forthcoming press conference, Christine Lagarde is likely to push back against expectations for policy rates to start falling in April. It came …
This is a special Global Economics Chart Pack that provides clients with key analysis to make sense of the macro and market impact of the disruptions to maritime shipping. The charts in this document come from our brand-new shipping dashboard , which …
What landing? Although GDP growth came in hotter than expected in the fourth quarter, underlying inflation continued to slow, with annualised core PCE inflation running at the 2% target in the fourth quarter. The upshot is that an early spring rate cut by …
We held a 20-minute online briefing this week to discuss our new forecast for the US housing market in 2024. You can watch the recording of the “drop-in” here . This Update recaps our answers to the most asked questions from clients and provides answers …
Our new Fiscal Headroom Monitor uses a simplified version of the Office for Budget Responsibility’s (OBR’s) model to estimate how changes in market interest rate expectations and gilt yields are influencing the scope for the government to announce new …
Wage growth remains soft across much of Emerging Asia, supporting our view that the region’s central banks will start monetary easing cycles sooner than most expect. Wage pressures have softened elsewhere in the emerging world in recent months, although …
Hiking cycle at an end, rates to stay high The 250bp interest rate hike from Turkey’s central bank (CBRT) today, to 45.00%, marks an end to its tightening cycle. Encouragingly, the communications were relatively hawkish and suggest that policymakers …
Norges Bank today reiterated that it will leave its policy rate at 4.5% “for some time”. But we think that inflation will fall rapidly this year, so when the Bank does start to cut rates, it will do so more quickly than its forecasts suggest. The decision …
Germany starts year in recessionary conditions The fall in the Ifo Business Climate Index in January suggests that Germany started the year as it ended 2023 – in recessionary conditions. We think the economy will contract again in Q1 and forecast zero GDP …
We’ll be discussing the outlook for Fed, ECB and Bank of England policy in a 20-minute online briefing at 3pm GMT on Thursday 1 st February. (Register here .) No one to vote for a rate hike and tightening bias to be dropped Bank to push back against …
Economic growth in Korea held up better than expected in Q4 but we expect the economy to grow below trend over the next couple of quarters as export growth softens in near term while tight fiscal and monetary policy continue to curtail domestic demand. …
24th January 2024
Brazil’s economy and financial markets have provided a positive surprise over the past 12-18 months. This Focus answers five key questions that will determine whether 2024 will be chalked up as a success too. The short point is that we think sentiment now …
January’s flash PMI surveys suggest that GDP growth in advanced economies ticked up from a very weak pace at the start of 2024. And with price pressures still strong, central banks will probably continue to push back against expectations for rate cuts in …
While we expect equities around the world to rebound – as a stock market bubble inflates on the back of growing hype around AI – we suspect that Latin American stock markets will keep lagging. Global stock markets are not off to a great start this year. …
The Bank of Canada’s decision to drop its tightening bias today is the first step toward interest rate cuts, particularly as the Bank also hinted that it may be willing to look through elevated mortgage interest costs and rent inflation. We continue to …
March rate cut is data dependent Rate expectations have rebounded Officials need to see more evidence that disinflation will be sustained We think that evidence is coming, paving way for a March rate cut At next week’s FOMC meeting, we don’t expect the …
Ghana’s relatively quick progress in debt restructuring talks with creditors contrasts with the slow experiences of Ethiopia and Zambia. Much of this can be explained by the China’s role in discussions, but private bondholders are also playing hardball. …
Bank drops its hiking bias The Bank of Canada’s decision to drop its tightening bias today is the first step toward interest rate cuts. We continue to think that the Bank’s forecasts for the economy are too optimistic, and that inflation will slow faster …
Tunisia’s government faces a large debt repayment next month and, while it should be able to make that, there is still a lot of debt coming due in the next twelve months. President Saied’s unwillingness to sign up to an IMF deal means that a sovereign …
The long boom in residential investment has been severely dented by soaring interest rates. Solid fundamentals mean investor interest will remain strong, but it is unlikely residential yields have peaked, or that relative performance will be as stellar as …
Inflation jumps, February cut in balance The jump in Mexico’s inflation to a higher-than-expected 4.9% y/y in the first half of January was entirely due to a particularly sharp rise in agricultural goods inflation. But it probably means the chances of …
The People’s Bank’s policy announcements today will provide only a small boost for China’s economy. Meaningful improvements in household or corporate borrowing would require substantial rate cuts or a significant change in economic sentiment. Neither …
This page has been updated with additional analysis since first publication. PMIs remain consistent with recession January’s euro-zone Composite PMI, published this morning, remained consistent with the economy contracting by around 0.2% q/q. The tick up …
Property yields rose further in Q3, but with risk-free rates now falling back, we think they will stabilise in the first quarter of 2024. But given historically narrow yield spreads, we doubt we will see much yield compression ahead either. As the economy …
This page has been updated with additional analysis since first publication. Lingering evidence of sticky services inflation may continue to concern the BoE The small rise in the composite activity PMI, from 52.1 in December to 52.5 in January, suggests …
Sharp inflation fall not enough to encourage early rate cuts South Africa’s headline inflation rate fell back further to 5.1% y/y in December but this is unlikely to be enough to convince the Reserve Bank to start an easing cycle tomorrow. November’s …
The central bank (BNM) left the overnight policy rate unchanged (at 3.0%) today and we think monetary policy is set for an extended pause as policymakers attempt to strike a balance between supporting the economy and combating inflation. The decision …
This page has been updated with additional analysis since first publication. Positive signs for this quarter The composite PMI rose for the second consecutive month in January, driven by rises in both manufacturing and services components. And with the …
This page has been updated with additional analysis since first publication. Export growth will be sluggish this year The trade deficit widened in December as import values rose more strongly than export values. But the weakness in net goods trade will be …
23rd January 2024
This page has been updated with additional analysis since first publication. Inflation continues its rapid descent With inflation falling rapidly, risks are tilted towards the RBNZ cutting rates sooner than Q3, as we’re currently predicting. Consumer …
The new cap on international student visas is another reason to expect population growth to slow sharply. That will give the Bank of Canada confidence that CPI rent inflation will ease later this year, providing a clearer path for headline inflation to …
EM GDP growth weakened over the second half of 2023, and we expect growth to remain subdued this year. Some EMs that underperformed last year will see modest recoveries, but many of the economies where growth was surprisingly strong last year will slow by …
Although the Bank of Japan (BoJ) stood its ground at its meeting today, we still expect it to hike its policy rate before long; that, we think, could contribute to a higher 10-year JGB yield. The BoJ didn’t make much of a splash in markets earlier today …
Central banks will probably continue to push back on expectations of rate cuts at their scheduled policy announcements in the coming weeks. But with inflation and wage pressures clearly moderating, we still think the Fed, ECB and Bank of England will cut …
Saudi Arabia’s government returned to running budget deficits last year and is likely to continue doing so. But these should be easily financed. Oil prices would probably have to fall sharply, to below $65pb, and remain there before the authorities need …
Our China Activity Proxy (CAP) suggests that economic output ended 2023 above the high it reached before growth spluttered in the middle of the year. With policy support still flowing, a further recovery is likely in the near-term. But we think momentum …
History suggests that when one Monetary Policy Committee (MPC) member votes to cut interest rates, a majority of the nine members will agree about two meetings later. There have been 14 turning points in Bank Rate since the MPC’s inception in 1997, by …
India is certain to become the world’s third-largest economy within the next decade, but the emergence of generative artificial intelligence (AI) will hamper rather than help its rise. This is in large part because of the detrimental impact it could have …
The Bank of Japan sounds increasingly confident that it will be able to achieve its inflation target on a sustained basis. With Mr Ueda at the post-BOJ-meeting press conference again emphasising the importance of the spring wage negotiations, we think the …
The Central Bank of Sri Lanka left its deposit rate on hold (at 9.00%) today, and gave no hints at what its next move would be. However, with inflation set to remain low and growth likely to struggle, we expect the central bank to resume its rate-cutting …
This page has been updated with additional analysis since first publication. More wiggle room for a pre-election splash December’s better-than-expected public finances figures brought some cheer for the Chancellor after the recent run of poor outturns and …
Policy normalisation is in sight Although the Bank of Japan stood pat at its meeting today, we’re sticking with our view that policymakers will soon call time on negative rates. The Bank’s decision to leave its policy rate unchanged at -0.1% was correctly …
While Australian households are as indebted as ever and mortgage payments have hit fresh record-highs, lending standards continue to be sound, loan defaults remain subdued and banks are well capitalised. Accordingly, there’s no compelling case to tighten …
Judging by the latest rally in some ‘big-tech’ sectors, renewed hype around Artificial Intelligence (AI) seems to explain why the S&P 500 has just racked up a new record high despite a recent rebound (if not today) in the 10-year Treasury yield. (See …
22nd January 2024
