Archive

May 13, 2024
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US Politics: Taking Trump At His Word

  • If Donald Trump returns to the White House in 2025, he will hit the ground running with an agenda that, among other things, stands to be deeply damaging to Europe both economically and politically. Europeans in denial should listen more carefully to his speeches and take him at his word.

By Alastair Newton

May 09, 2024
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BoE Errs Towards Cutting Too Early

  • The BoE’s unsurprising decision to maintain the Bank rate at 5.25% was accompanied by rare pushback against prevailing market pricing. MPC members are more dovish.
  • June’s outcome will depend on developments in their inflation persistence assessment, including wage settlements where the current data are tracking excessively high.
  • That upside seems unlikely to discourage the MPC for long, so we now expect the MPC to start cutting in August but with a pause in February and a risk of a reversal.

By Philip Rush

May 08, 2024
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Policy Rate Reversal Warnings

  • Rate hikes are unlikely to resume unless forthcoming cuts prove premature. Cutting outside recessionary regimes has historically been prone to reversals to higher peaks.
  • 1998’s cuts followed a shock that failed to prove recessionary. Fed cuts in 1967 sowed the seeds of a severe inflation problem. Both cutting cycles were more than reversed.
  • Independent ECB hikes in 2008 and 2012 were rapidly proven policy mistakes. The BoE’s single 2005 cut was also wrong. Hopes that 2024 is benignly like 1989 may be misplaced.

By Philip Rush

May 07, 2024
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UK Politics: The Third Way Renewed?

  • The outcome of the so-called ‘battle for Labour’s soul’ will ultimately be determined principally by Sir Keir Starmer’s understated but undoubted ambition coupled with the Third Way principle that ‘what matters is what works’.

By Alastair Newton

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