Archive

HEW: Recovering UK Data

• UK macro data filled a release calendar with positive news on activity from retail sales, the PMIs, public finances, and even unemployment through its first stability since July.
• Inflation data didn’t offset this hawkish pressure. It increased despite the early sample and the EA rate getting revised even softer. Greenland’s travails distracted markets.
• Next week’s calendar is dominated by the Fed’s guidance around its likely unchanged policy decision. We don’t see the Fed in any rush to cut again, nor the BoE or ECB.

By Philip Rush

UK: Only A Little Less Fiscally Bleak

• The UK public finances ended 2025 bullishly with cash receipts jumping ahead of forecasts, sending an encouraging signal ahead of January’s critical tax deadline.
• Tracking a slightly better performance in 2025-26 is unlikely to create a post-pandemic low in borrowing after years of imprudence that relied on restraint rolling ever later.
• Borrowing should be £30-40bn above the initial forecast for this year, made during the depths of covid doom. Fiscal slippage remains the real rule investors should remember.

By Philip Rush

Norway's Restrictive Pause Amid Inflation Dilemma

• Norges Bank held the policy rate at 4% as expected, reiterating that cuts are likely later in 2026 but only if disinflation progresses as projected.
• Guidance points to one or two cuts this year, but policymakers stress a restrictive stance until underlying inflation, stuck near 3%, moves closer to the 2% target.
• A March cut looks unlikely; the path and timing of easing hinge on labour market softening, cost pressures, and krone moves ahead of new forecasts in March.

BNM: Flexibility Amid Global Bifurcation

• BNM kept its OPR at 2.75%, in line with the consensus. Benign inflation and solid growth justify a steady near-term rate path.
• With inflation anchored near 2% and growth resilient, policy stays neutral, preserving flexibility rather than signalling a clear hike or cut bias.
• Future rate moves hinge on tariff and global inflation risks. Shocks to trade or prices could shift BNM from a prolonged hold to recalibration.