Archive

June 23, 2025
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Growth Broadly Back In The Black

  • PMI recoveries extended in June, taking averages above 50 as manufacturing is its strongest since Sep-22, and services almost align with its averages of recent years.
  • The UK survey balances suffered from bad vibes, so they are the primary beneficiary of sentiment improving. Their recovery can extend further as vibes improve.
  • Broad expansion helps labour demand to keep pace with supply, denying doves proof of a disinflationary demand shock. Without that, cuts roll later and may not resume.

By Philip Rush

June 19, 2025
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BoE Still Seeking Evidence

  • Guidance around an unsurprisingly unchanged BoE rate preserved the necessary uncertainty about when it might ease again, albeit with a broad bias to do more later.
  • Dave Ramsden joined the dovish dissent, taking it to three for a 25bp cut, but none of them are in the MPC majority revealed in May as leaning towards a slower pace of cuts.
  • We believe the August decision remains finely balanced for the majority. Ongoing data resilience, discouraging the Fed and ECB from easing, should also keep the BoE on hold.

By Philip Rush

June 18, 2025
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EA Inflation Predictably Near The Target

  • Disinflationary news from May’s flash inflation release was confirmed in the final print, although a rebound in some underlying inflation measures damped the initial signal.
  • Resurgent oil prices could rapidly reverse the dovish space expanded by past falls. Our forecast bumps around the target through 2026 and 2027, settling at 2%.
  • Other forecasts are a little lower and only suffer a slight bias to be exceeded. The ECB can remain reassured by an outlook close to 2% without cuts, and not deliver any more.

By Philip Rush

June 18, 2025
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UK Course-Corrected CPI Stays High

  • UK inflation unsurprisingly slowed in May as a correction to vehicle excise duty knocked 0.1pp from the rate, reversing all the upside to our above-consensus April forecast.
  • Services inflation aligns with the BoE’s forecast from its May forecast, where MPC members were biased towards slowing their easing. Underlying rates remain too high.
  • Inflation keeps trending above the consensus, cumulating a 1pp error since rate cuts began, but aligning with our forecast from 1yr and 2yrs ago. We remain hawkish.

By Philip Rush

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