Turkiye Inflation Review: CPI Decelerated to 49.4% YoY in September Indicating a Positive Real Interest Rate

October 3, 2024 9:32 AM UTC

Bottom line: As we envisaged, CPI cooled off to 49.4% y/y in September from 51.9% in August backed by the lagged impacts of the tightening cycle, relative slowdown in credit growth, and tighter fiscal stance but the deceleration pace was less-than expected. We continue to think the falling trend wi

Markets: Rate Cuts or Geopolitics?

October 2, 2024 9:36 AM UTC

Israel will likely counteract Iran, which will prompt a further missile attack by Iran.  However, our bias remains that Israel main aim is to have a buffer zone in southern Lebanon up to the Latani river and not fight a prolonged war with Iran.  This limits the economic fallout globally and on oil

Turkiye Inflation Preview: CPI will Continue to Decelerate in September

September 30, 2024 11:40 AM UTC

Bottom line: After easing to 51.9% y/y in August from 61.8% y/y in July due to favorable base effects, the lagged impacts of the tightening cycle, relative slowdown in credit growth, and tighter fiscal stance, we expect the falling trend will continue in September supported by moderate slowdown in

September Outlook: Rate Cuts But How Far?

September 27, 2024 7:44 AM UTC

The 15 chapters of our September Outlook have now been published.  See the headlines and weblinks enclosed for links to the articles on economic, policy and markets for the 23 countries that we cover.

SNB Review: More Cuts on the Way

September 26, 2024 8:24 AM UTC

Very much as expected, the SNB today repeated the 25 bp policy rate cut that it had made twice since March.  This took the policy rate to 1.0% and reflected an even clearer below-target inflation picture in both recent actual numbers and the updated outlook (Figure 1).  This flagged further easing

Sweden Riksbank Review: Rate Cuts – Faster and a Little Further?

September 25, 2024 8:15 AM UTC

A third successive 25 bp rate cut (to 3.25%) surprised no-one at this month’s Riksbank meeting.  More notably, updated forecasts more formally validated both the likelihood and the rationale for the two added cuts by end-year that the Board hinted at after the August easing and which largely are

Outlook Overview: Rate Cuts But How Far?

September 25, 2024 7:30 AM UTC

·        The U.S. economy is slowing, with the critical question being whether this is a soft or harder landing.  Our broad analysis leaves us inclined to the soft landing view into 2025, though we shall watch real sector data closely over the next 3-6 months to check the trajectory.  Else

EMEA Outlook: Rate Cuts Loading in 2025

September 25, 2024 7:00 AM UTC

·     In Turkiye, we still foresee upside risks emanating from buoyant domestic demand, the stickiness of services inflation, and adverse geopolitical impacts leading average inflation to stand at 58.8% and 35.3% in 2024 and 2025, respectively. We think Central Bank of Republic of Turkiye (CBRT

DM Rates Outlook: Rate Cuts Arrive Except Japan

September 24, 2024 9:00 AM UTC

•    For U.S. Treasuries, we see 2yr yields coming down further on our baseline soft landing view, as the Fed moves consistently to a 3.00-3.25% Fed Funds rate. However, with considerable Fed easing already discounted, 2yr yield decline should be modest and 2yr yields should bottom mid-2025. 1

Equities Outlook: Choppy U.S. and Outperformance Elsewhere

September 24, 2024 8:30 AM UTC

 •     We now forecast 5450 for the S&P500 for end 2024, but could see a move to 5200/5000 in the next 3-6 months as volatile data keeps the soft v hard landing debate alive.  On our baseline of a U.S. soft landing, we would see the S&P500 at 5600 by end 2025. The tech sector is still really i

Commodities Outlook: Fragile Foundations

September 23, 2024 9:30 AM UTC

Oil prices in the short to medium term will be shaped by demand in China and the U.S. In particular, we expect weak data in China to continue weighting on oil prices in Q4 2024, with limited upside risks from supply-side developments. In 2025, demand growth will likely remain slow in the first half,

Time Has Come: SARB Cut the Key Rate to 8.0% on September 19

September 19, 2024 3:57 PM UTC

Bottom line: As we expected, South African Reserve Bank (SARB) started cutting the key rate at the upcoming MPC meeting on September 19 and decreased it from 8.25% to 8.0% given recent fall in inflation, suspended power cuts (loadshedding) after March, deceleration in inflation expectations and a re

SNB Preview (Sep 26): Another Cut All But Certain But How Large an Inflation Target Undershoot

September 19, 2024 1:54 PM UTC

Along with market thinking, we see the SNB next Thursday repeating the 25 bp policy rate cut that it has now made twice since March.  This would take the policy rate to 1.0% and where the very clear below-target inflation picture in both recent actual numbers and the outlook flagged by the SNB in J

No Surprises as CBRT Continued to Hold Key Rate Stable at 50% on September 19

September 19, 2024 1:11 PM UTC

Bottom Line: As predictions were centred around no change, Central Bank of Turkiye (CBRT) kept the policy rate stable at 50% for the sixth consecutive month on September 19. CBRT reiterated in a statement that tight monetary stance will be maintained until a significant and sustained decline in the

BoE Review: Explicit Gradualism

September 19, 2024 12:05 PM UTC

The expected unchanged MPC decision came with what some may regard was a lack of any major dissent beyond that from arch-dove, Swati Dhingra.  But that 8:1 vote is very much a reaction to the closeness of the MPC vote last month to cut Bank Rate by 25 bp to 5.0%.  It is also preference from the MP

Norges Bank Review: Heads Still in the Sand?

September 19, 2024 8:57 AM UTC

As with the five previous policy meetings, the Norges Bank kept its policy rate at 4.5% and equally unsurprising moderated its previous hawkish rhetoric - slightly. While it still fought against market expectations by suggesting policy will remain on hold until year end it did drop its recent stress

South Africa’s Inflation Dips Below Midpoint Target with 4.4% YoY in August

September 18, 2024 9:01 AM UTC

Bottom Line: After inflation decreased to 4.6% YoY in July due to slowdown in costs for food, fuel, housing and transportation, the downward trend continued in August and CPI hit 4.4% YoY given suspended power cuts (loadshedding), a relatively stable Rand (ZAR), decrease in inflation expectations co

UK CPI Review: Inflation Stable and Services Resilience Still Evident?

September 18, 2024 6:31 AM UTC

The July CPI was notable for the clear and larger-than-expected fall in services inflation, one driven by a fall in restaurant/hotel inflation, this often seen as a bellwether indicator of price persistence.  The August data showed mixed signs on such a basis.  Indeed, services inflation rose back

Sweden Riksbank Preview (Sep 25): Rate Cuts – Faster and Further?

September 17, 2024 8:45 AM UTC

A third successive 25 bp rate looms at this month’s Riksbank meeting verdict (Sep 25) to 3.25%.  More notably, updated forecasts are likely to more formally validate the rationale for the two added cuts by end-year that the Board hinted at after the August easing and which now seem all but certai

September 27 Outlook Webinar: Rate Cuts But How Far?

September 15, 2024 11:17 AM UTC

    Uncertainty about whether the U.S. economy will have a soft or hard landing is growing as the market approaches Q4.  This is shaping the debate regarding the scale of easing through the remainder of 2024 and 2025 by the Fed.  European easing is underway, but how much further will central ba

Sep 27 Outlook Webinar: Rate Cuts But How Far?

September 15, 2024 10:30 AM UTC

    Uncertainty about whether the U.S. economy will have a soft or hard landing is growing as the market approaches Q4.  This is shaping the debate regarding the scale of easing through the remainder of 2024 and 2025 by the Fed.  European easing is underway, but how much further will central ba

As we Expected, CBR Hiked Key Rate to 19% as Inflation Continues to Soar

September 13, 2024 4:20 PM UTC

Bottom Line: As we predicted, Central Bank of Russia (CBR) announced on September 13 that it increased its policy rate by 100 bps to 19% to tame the stubborn price pressures stemming from high military spending, tight labour market and fiscal policy igniting domestic demand. CBR said in a press rele

BOE Rate Cuts to 3.50% Then Stop?

September 13, 2024 8:30 AM UTC

UK wage inflation and CPI services will likely be less persistent than the BOE hawks worry about, which will likely see less resistance to UK rate cuts.  This gives us confidence of quarterly rate cuts at the next five BOE monetary policy reports, plus one additional cut in December 2024 or March 2

Time Has Come: SARB will Likely Decrease the Key Rate to 8.0% on September 19

September 12, 2024 7:09 PM UTC

Bottom line: South African Reserve Bank (SARB) will likely start cutting the key rate at the upcoming MPC meeting on September 19 and decrease the rate from 8.25% to 8.0% given recent fall in inflation, suspended power cuts (loadshedding) after March, deceleration in inflation expectations and a rel

High Inflation Continues to Dominate Russian Economy: 9.1% YoY in August

September 11, 2024 6:44 PM UTC

Bottom Line: According to Russian Federal Statistics Service data released on September 11, inflation stayed at 9.1% YoY in August after July, the highest reading since February 2023, due to adverse base effects, strong military spending, high domestic demand, tight labor market, continued expansion

BoE Preview (Sep 19): A Dovish Hold?

September 11, 2024 8:57 AM UTC

Given weakness in private sector jobs data that undermines BoE GDP optimism, and given what we think could be a downside surprise to the BoE in CPI data due the day before the decision, we would not rule out a further BoE rate cut when the MPC gives it next verdict on Sep 19.  More likely, given re

UK GDP Review: More Mixed Messages Give BoE Food for Thought

September 11, 2024 6:34 AM UTC

Surprising to the downside, the economy failed to show more positive signs with the July GDP data.  Indeed, GDP was flat in m/m terms for the second successive month, compared to a 0.2% m/m rise widely envisaged.  Thus the data still show showing volatility, as GDP growth has been positive in only

Norges Bank Preview (Sep 19): Less Hawkish Rhetoric?

September 10, 2024 7:37 AM UTC

As has been the case for the five previous policy meetings, the Norges Bank is almost certain to keep its policy rate at 4.5% when the Board offers its next verdict on Sep 19.  But amid a slightly disappointing mainland real economy backdrop and what have been softer than (Norges Bank) expectations

UK August CPI Preview (Sep 18): Inflation Slips Back and Services Resilience Diminishes Further?

September 9, 2024 10:49 AM UTC

The July CPI was notable for the clear and larger-than-expected fall in services inflation, one driven by a fall in restaurant/hotel inflation, this often seen as a bellwether indicator of price persistence.  Indeed, services inflation fell 0.5 ppt to 5.2%, a two-year low and well below the BoE pro

Turkiye Inflation Review: CPI Further Cooled Off to 51.9% in August

September 3, 2024 12:18 PM UTC

Bottom line: After easing to 61.8% y/y in July down from 71.6% annually in June, consumer price index (CPI) cooled further down to 51.9% y/y in August backed by the favourable base effects, tightened monetary and fiscal policies, additional macro prudential measures and relative slowdown in credit

UK GDP Preview (Sep 11): More Mixed Messages Ahead as Fiscal Updates Looms

September 3, 2024 9:23 AM UTC

It does seem as if the economy is going to show more positive signs with the July GDP data.  Indeed, we see a 0.2% m/m rise, albeit with the data still showing volatility.  Indeed, GDP growth has been positive in only one of the three months of the last quarter, having been flat in June.  Regardl

Turkiye's GDP Growth Decelerates in Q2 with 2.5% YoY

September 2, 2024 7:39 AM UTC

Bottom Line: Turkish Statistical Institute (TUIK) announced on September 2 that Turkish economy expanded by 2.5% YoY in Q2, after growing by a strong 5.7% in Q1 driven by the buoyant demand and government spending. As we expected, the pace of the GDP growth decelerated in Q2 while we envisage the de

Strong Military Spending and Investment Growth Help Russian Economy Expand by 3.4% YoY in July

August 30, 2024 12:13 PM UTC

Bottom Line: According to the preliminary figures announced by the Russian Ministry of Economic Development, Russia's GDP grew by 3.4% YoY in June after expanding by 3% YoY in June driven by military production and investments. We foresee Russian economy will expand by 2.5% in 2024 despite aggress

CBRT Remains Cautious Holding Key Rate at 50% Despite Recent Fall in Inflation

August 29, 2024 10:24 AM UTC

Bottom Line: Central Bank of Turkiye (CBRT) recently released its summary of the Monetary Policy Committee (MPC) meeting after keeping the policy rate stable at 50% on August 20. CBRT said in its summary that tight monetary stance will be maintained until a significant and sustained decline in the u

Ukraine War Update: Surprising Ukraine Incursion in Russia Continues

August 27, 2024 10:51 AM UTC

Bottom Line: Ukraine’s surprise cross-border offensive inside Russia's western Kursk region continues with pace as Ukrainians recently advanced near Sudzha. In response, Russian military deploys forces from lower priority sectors of the frontline in Ukraine to the frontline in Kursk Oblast. We for

Riksbank Deliver 25bps and More to Come

August 20, 2024 7:58 AM UTC

Riksbank appear more concerned about a weak economy, which is causing forward guidance of a faster pace of easing after today’s 25bps cut to 3.50%.  We look for 25bps cuts at the September and December meeting and a further 25bps is possible at the November meeting if inflation remains under cont

Norges Bank Review: Head in the Sand?

August 15, 2024 9:44 AM UTC

Surprising few, and with no mention of recent stock market gyrations, the Norges Bank is kept its policy rate at 4.5% for a fifth successive meeting this month, the last hike to the current 4.5% policy rate occurring last December.  But amid what have been softer than (Norges Bank) expectations for

UK GDP Review: Mixed Messages with Little to Sway the BoE

August 15, 2024 7:00 AM UTC

After the mild recession in H2 last year, the ‘recovery’ now evident is much clearer than any expected with GDP growth notably positive but in only one of the three months of the last quarter.  Indeed, amid weaker retail sales, property transactions and car production data, GDP failed to grow i

South Africa’s Inflation is Expected to Continue its Downward Trend in July

August 14, 2024 1:56 PM UTC

Bottom Line: After inflation decreased to 5.1% YoY in June due to slowdown in costs for food, fuel and transportation, we now foresee that the downward trend will continue in July and CPI will further slow down to 4.9% - 5.0% Yr/Yr given suspended power cuts (loadshedding), a stable Rand (ZAR), fall

Sweden Riksbank Preview (Aug 20): Still Trying to be Gradual?

August 14, 2024 8:15 AM UTC

Recent data have justified the Riksbank’s increased confidence in the current disinflation process and is highly likely to exercise its easing bias with a second (in three months) 25 bp rate cut (to 3.5%) at the Sep 20 policy verdict.  As for future policy, in a Board meeting with no fresh projec

UK CPI Review: Inflation Up on Energy But Services Resilience Diminishes

August 14, 2024 6:47 AM UTC

The July CPI is notable for a clear fall in services inflation, one driven by a fall in restaurant/hotel inflation, this often seen as a bellwether indicator of price persistence.  Indeed, services inflation fell 0.5 ppt to 5.2%, a two-year low and well below the BoE projection.  Even so, due to e

UK Jobs Data: A Tale of Two Markets

August 13, 2024 2:14 PM UTC

Amid distortions in much of the labor market data, the BoE is focusing on private sector numbers, especially given the added distortion of recent and looming high public sector ay awards.  In that regard it will get some solace from today’s average earnings data which show private regular pay at

Market Turbulence and What has Changed?

August 13, 2024 12:22 PM UTC

 •   We see the recent market turbulence as being partially a reduction in risky positions.  However, the U.S. economy is slowing and triggering a debate about a soft or harder landing (we see slowing rather than recession in our baseline), while EZ data shows the recovery is not gaining moment

Ukraine War Update: Surprising Ukraine Incursion in Russia

August 12, 2024 4:02 PM UTC

Bottom Line: After Russia executed strong counteroffensive operations in the western regions of Ukraine this summer, aiming to seize more territory before the U.S. presidential elections, Ukraine made a surprise attack in return and conducted a cross-border offensive inside Russia's western Kursk re

Strong Inflation Rally Continued in July: 9.1% YoY

August 9, 2024 6:27 PM UTC

Bottom Line: According to Russian Federal Statistics Service data released on August 9, inflation jumped to 9.1% YoY in July after hitting 8.6% YoY in June, the highest reading since February 2023, due to adverse base effects, strong military spending, high domestic demand, tight labor market, conti

Norges Bank Preview (Aug 15): Less Hawkish?

August 9, 2024 10:00 AM UTC

Given its recent rhetoric and currency concerns, and in spite of current stock market gyrations, the Norges Bank is very likely to leave its policy rate at 4.5% for a fifth successive meeting next Thursday, the last hike to the current 4.5% policy rate occurring last December.  But amid what have b

CBRT Keeps Its End-Year Inflation Forecast Unchanged at 38%

August 8, 2024 12:00 PM UTC

Bottom Line: Central Bank of Turkiye (CBRT) released its third quarterly inflation report of the year on August 8, and did not change its inflation forecasts and policy guidance. CBRT projects that inflation will fall to 38% at the end of 2024, and kept its forecasts for 2025 and 2026 unchanged at 1

UK GDP Preview (Aug 15): Small Correction After Run of Upside Surprises

August 7, 2024 10:28 AM UTC

After the mild recession in H2 last year, the ‘recovery’ now evident is much clearer than any expected with GDP growth notably positive in all but one of the five months to May.  But amid weaker retail sales, property transactions and car production data, we see a 0.1% m/m correction in June GD

UK CPI Preview (Aug 14): Inflation to Rise on Energy But Services Less Resilient?

August 6, 2024 12:31 PM UTC

CPI inflation’s flirt with the 2% target is likely to be short-lived.  We see the rate rising back up to 2.3% in July from 2.0%, this projection being a notch below BoE thinking, but with the core edging down to 3.4% (Figure 1).  The rise is solely due to energy base effects related to the Ofgem