June 19, 2024
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UK Services Air-Lifts Dovish Pressure

  • UK services CPI inflation exceeded expectations again by only slowing to 5.68%, ruling out a June rate cut by being 0.4pp above the BoE’s forecast, but maybe not much more.
  • Headline CPI inflation is only tracking 5bps higher, and underlying measures are slowing, albeit not to target, while volatile airfares drive most of the latest upside.
  • The BoE will probably feel confident enough in its subdued forecast to keep an August cut alive. We still see that as premature but believe the BoE will do it regardless.

By Philip Rush

June 19, 2024

Sweden Unemployment Rate 8.7% in May-24

- Sweden's unemployment rate decreased to 8.7% in May 2024, marking the lowest level since February 2024 but still remaining above historical averages.
- Despite a slight improvement in unemployment, mixed economic indicators indicate ongoing pressures in the labour market and economy overall.

June 18, 2024
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Kugler - Some Reasons for Optimism about Inflation

Adriana Kugler, an expert economist, discusses the economic outlook and monetary policy in her speech. She acknowledges that inflation remains too high but expresses optimism about the overall progress and trajectory towards the Federal Open Market Committee's inflation goal of 2 percent. Kugler highlights the decline in personal consumption expenditures (PCE) inflation from its peak in 2022 and the continued improvement in market-based services inflation. However, she notes that housing services inflation remains persistent, and further progress in reducing inflation is likely to be gradual. Kugler also discusses the factors contributing to her optimism, including reduced frequency of price adjustments, anchored longer-run inflation expectations, falling markups of prices over labor costs, and firms' responses to consumers pushing back against price increases. She points out that slower growth in labor costs and the prospect of productivity growth can also contribute to continued disinflation. Kugler believes that the current stance of monetary policy is sufficiently restrictive to bring inflation back towards 2 percent without a sharp contraction in economic activity or a significant deterioration of the labor market. If the economy evolves as expected, she suggests that it may be appropriate to begin easing policy later this year.

Positivity: 80
Uncertainty: 50

June 18, 2024
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de Guindos - Strengthening European financial markets to ensure a more resilient future

Keynote speech by Luis de Guindos, Vice-President of the ECB, at the Joint Conference of the European Commission and the ECB on European Financial Integration

In this keynote speech, Luis de Guindos discusses the importance of financial integration and stability for Europe's future. He acknowledges that progress towards greater financial integration in the euro area has been disappointing in recent years and highlights the lack of growth in cross-border financial market activities and risk sharing. De Guindos emphasizes the need to make it easier for banks to operate as integrated groups within the banking union and calls for further harmonization of bank crisis management. He also advocates for the development of a single market for capital in the EU to enhance the euro area economy's resilience and support strategic goals such as the green and digital transitions. The speech concludes with a call for the advancement of the capital markets union and the removal of barriers within the Single Market.

Positivity score: 65
Uncertainty score: 30