Long Run Update Fed adopts average inflation target Chair Jerome Powell announced this morning that the Fed will be adopting what he described as a “flexible form of average inflation targeting”, which we expect will trigger additional policy stimulus... 27th August 2020 · 3 mins read
China Chart Pack Recent stimulus has set back domestic rebalancing The consumption share of GDP had edged up in recent years, but that progress has been reversed by the COVID-19 stimulus response, which has focused on boosting investment. The consumption share should... 27th August 2020 · 11 mins read
Australia & New Zealand Chart Pack Lockdown fatigue is making restrictions less effective In Australia, the lockdown in Melbourne in July was of similar intensity to the initial lockdown in April. Even so, retail sales only fell by 2% m/m in Victoria which still left them around 2% above... 27th August 2020 · 11 mins read
Africa Data Response South Africa Consumer Prices (Jul.) South African inflation will probably hover near July’s reading, of 3.2% y/y, in the coming months and, as the economic recovery wavers, we think that more monetary easing lies in store. 26th August 2020 · 2 mins read
Asia Chart Pack Second wave unlikely to completely derail recoveries Having been among the fastest in the world at controlling the initial outbreak, Hong Kong, Vietnam and Korea are all at different stages of a second wave of infections. With new infections in Hong... 26th August 2020 · 14 mins read
Latin America Data Response Brazil IPCA-15 (Aug. 2020) The further rise in Brazilian inflation, to 2.3% y/y in the first half August, was relatively modest and we expect the headline rate to remain well below the central bank’s 2020 target of 4% over the... 25th August 2020 · 2 mins read
RBA Watch Bank to resume bond purchases in earnest The Reserve Bank of Australia isn’t keen on providing more monetary stimulus and instead wants the government to do the heavy lifting. As such, the Bank will certainly keep policy settings unchanged... 25th August 2020 · 7 mins read
Latin America Data Response Mexico Bi-Weekly CPI (Aug.) The rise in Mexican inflation to 4.0% in the first half of August, the upper end of Banxico’s target range, will probably prompt the central bank to slow the pace of its easing cycle. But with... 24th August 2020 · 2 mins read
UK Economics Weekly The consequences of the pandemic for inflation The surprise rise in CPI inflation in July highlights that the effects of the pandemic will not only be deflationary. The hit to supply from the pandemic combined with shifting spending patterns may... 21st August 2020 · 4 mins read
India Economics Update New MPC will have more work to do The minutes of the Reserve Bank’s August policy meeting show that the MPC – of which three members are now due to step down – has turned notably more hawkish on the inflation outlook. But there are... 21st August 2020 · 3 mins read
Japan Data Response Consumer Prices (Jul.) Inflation excluding fresh food and energy was just over zero in July and we think it won’t be long before it turns negative. We expect sluggish demand to overwhelm the impact of social distancing... 21st August 2020 · 2 mins read
Europe Data Response Euro-zone Final HICP (July) July’s jump in euro-zone core inflation was entirely due to delayed summer sales, so it should reverse in August now that those sales have begun. Meanwhile, social distancing rules appear to have had... 19th August 2020 · 3 mins read
UK Data Response Consumer Prices (Jul.) The sharp rise in CPI inflation from +0.6% to +1.0% came as a bit of a surprise, but it is unlikely to mark the start of an upward trend. CPI inflation still looks on track to fall to within a whisker... 19th August 2020 · 3 mins read
India Chart Pack Investment will take years to recover If the monthly activity data are anything to go by, GDP data for Q2 (Q1 of FY20/21) due at the end of the month will show that investment slumped by more than 30% y/y. That will prove the bottom given... 19th August 2020 · 9 mins read
Latin America Economics Update Weaker Mexican inflation to drive more Banxico cuts Headline inflation in Mexico looks set to fall towards 3% over the coming months as both food and core inflation soften. We think that will give Banxico scope to cut its policy rate by an additional... 18th August 2020 · 3 mins read
Japan Economics Update Will the surge in the money supply boost inflation? The money supply has recently been growing at the fastest rate in at least two decades, boosted by government giveaways and generous lending to non-financial firms. However, the expansion in the... 18th August 2020 · 4 mins read
