Archive

ECB Easing Transmits Need To Hold Rates

• ECB rate cuts are stimulating a trend rise in lending growth to levels consistent with no change in policy, as the monetary transmission mechanism delivers the easing.
• Activity surveys are less bullish, but reflect stagnant supply-side potential that can’t be fixed by stimulating demand, which would merely stoke the inflation problem.
• Potentially inappropriate Fed easing does not raise peer pressure like fundamental US weakness would. Domestic news dominates and supports our ECB call for no change.

By Philip Rush

BSP Cuts to 5% in "Goldilocks" Zone

• BSP cut rates by 25bp to 5.0%, meeting consensus expectations and bringing total easing to 150bp since the cycle began one year ago.
• A further 25bp cut is likely by December, targeting a terminal rate of 4.75% as inflation remains well below the 2-4% target range.
• US tariff uncertainty weighs on outlook, but the BSP signals a slightly less dovish stance as policy approaches a "Goldilocks zone" sweet spot.

Russia/Ukraine: What Now?

• A week after the event, it is clear that the Trump/Putin summit presented the latter with a big win at little, if any, cost.
• Donald Trump is unlikely to come up with anything that will bring Mr Putin to the negotiating table in good faith once his latest two-week ‘deadline’ expires.
• Furthermore, Mr Trump remains philosophically inclined to favour Russia, a leaning that probably poses a greater risk to Kyiv than Mr Putin himself does.

By Alastair Newton

HEW: Dovish Bias Dominates

• The evidential hurdle formally shifted in support of a Fed rate cut in September. Still, the data may yet discourage it, or embolden the market to price it as mistaken.
• Flash PMIs broadly reinforced the resilience narrative, while another upside UK inflation surprise sets the BoE up to resist cutting amid persistently excessive expectations.
• A quieter, bank holiday-shortened week leaves the BOK and BSP decisions as monetary policy highlights. Euro area M3 and some national flash HICP prints are our data focus.

By Philip Rush