Archive

New Zealand Extends Dovish Rate Cycle

• The RBNZ cut the OCR to 3% in August, matching consensus expectations amid stalled growth and stable medium-term inflation.
• This decision was split, with a minority favouring a larger cut. Further reductions to 2.5% are likely unless inflation surprises persist.
• Weak household demand and global uncertainty may extend the easing cycle, making future rate policy highly data-dependent.

Riksbank Holds at 2% Amid Fragile Outlook

• The Riksbank held its rate at 2% while seeing above-target summer inflation as temporary.
• Weak growth and a fragile labour market sustain rate-cut probability later in 2025.
• The policy outlook hinges on fading inflation pressures, demand recovery, and global risks.

Indonesia’s Surprise Summer Rate Cut

• Bank Indonesia’s surprise 25bps cut to 5.00% signals proactive easing amid subdued inflation and global uncertainty.
• The Rupiah’s strength and solid capital inflows provide policy space to support domestic growth despite external risks.
• Further cuts are likely this year, contingent on exchange rate stability, fiscal support, and global economic developments.

EA: Re-Balance Of Payments

• An end to the Euro’s bullish trend is now revealed to have coincided with a reversal of two critical supports. Frontloaded export levels have normalised without payback.
• International portfolio investment into the EA during April fully unwound between May and June, revealing no investor appetite to hold higher allocations to EA assets.
• The Euro is not benefiting from a structural shift towards it, so we doubt the bullish trend will resume. Belated payback in goods inventories could also eventually weigh.

By Philip Rush