Archive

September 09, 2022
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HEW: UK Inflation Outlook Easing pre-BoE

  • Over the past week, Liz Truss became Prime Minister and capped energy bills at £2.5k, hacking down inflation’s peak and the justification for excessive rate hikes. High inflation startled the ECB into a 75bp leap with more tightening ahead.
  • Next week’s calendar is full of UK events, despite a week’s delay to the BoE decision. Inflation faces differential base effects and petrol price falls, which drive our low CPI forecast even while we are a tenth above consensus for the RPI.

By Philip Rush


September 02, 2022
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HEW: ECB Response to Inflation Shock

  • Over the past week, EA inflation increased slightly more than expected, including in the core. The downside in food prices offset the upside in energy. War-related pressure on power seems set to persist, encouraging ECB hawks, despite issues in Italy.
  • Next week’s ECB decision is the main event on the calendar. We expect it to hike by another 50bps, resisting some market calls for 75bp. Only moving the deposit rate by the greater amount would be a compromise that restores symmetry to the corridor.

By Philip Rush


August 26, 2022
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HEW: Power to Political Problems

  • Over the past week, flash PMIs confirmed a deepening of the economic downturn, with UK manufacturing and US services bleakest. Surging European power prices mean the squeeze is getting worse, making it one of a few politically charged areas.
  • Next week’s EA inflation release is unlikely to reverse the rising headline but should show momentum petering out. EA unemployment and the ONS’s belated decision on whether to count energy bill credits as disinflation are other highlights for us.

By Philip Rush