June 17, 2022

HEW: UK Demand Buried While Rates Rise

  • Over the past week, UK data broadly disappointed, with a shock GDP fall and unemployment rate rise in April. Inflation concerns dominate at the BoE, which hiked by 25bp while three members dissented for 50bps.
  • Our focus next week is the UK inflation data for May, where we are a tenth above the current RPI consensus. Most European countries have beaten expectations again this month, with EA ones unrevised in final prints.

By Philip Rush

June 16, 2022
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BoE: Carried to Hawkish Rodeo

  • As widely expected, the BoE delivered a fifth consecutive rate hike to 1.25% in June. Three members dissented for a 50bp move again, despite disappointing activity data.
  • Aggressive action elsewhere is hitting GBP, raising UK inflation pressure and pushing the BoE to get more hawkish, albeit less than some market participants expected.
  • It no longer looks like the MPC will want to skip a September step in its hiking cycle and become an outlier, so we now see the policy rate 25bps higher by Nov-22 at 2%.

By Philip Rush

June 15, 2022
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France: ‘Sur Des Charbons Ardents’

  • Following the 12 June first-round election, whether President Emmanuel Macron can retain his majority in the legislature is ‘on a knife-edge’. Failure would put his entire reform agenda in jeopardy.

By Alastair Newton