March 20, 2023

UK Politics: Sunak Shines

  • Over the past three weeks, UK Prime Minister Rishi Sunak has scored some significant successes, which have registered with the electorate. However, he still has a mountain to climb if his Conservative Party is to avoid a heavy defeat in the next general election.

By Alastair Newton

March 17, 2023

HEW: Policymakers Keep Their Focus

  • Over the past week, financial stability concerns crushed market pricing in a panic before stabilising. The ECB kept its focus on high inflation and delivered its 50bp rate hike, while hawkish pressures built further in the UK labour market and budget.
  • Next week provides an opportunity for the BoE to respond, and we still expect it to hike by 25bp after the Fed does the same, despite CPI inflation slowing to 9.8% (0.1pp under the BoE forecast). We will also watch the flash PMIs after recent resilience.

By Philip Rush

March 17, 2023
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EA: HICP Resilience Confirmed in Feb-23

  • The final EA HICP inflation print confirmed a slight slowing to 8.5% in Feb-23. The ex-tobacco rate hit 8.61%, only 2bps above our forecast amid marginal news in the details.
  • Resilience was also confirmed in the core measures, which do not appear to be converging towards target-consistent rates. Excesses haven’t broken yet.
  • March may undershoot the consensus amid less seasonal space to rebound from January, but we see inflation trending above the ECB’s forecast, encouraging more rate hikes.

By Philip Rush