February 05, 2024

HEM: Dovish Dreams Decaying
- Cut pricing should keep rolling later without weak data
- Resilient activity suggests rates are not that tight
- Wage growth is too high for import prices to offset
- The Fed can cut in June ahead of the ECB in September
- Structural issues still delay our BoE call until Feb-25
January 08, 2024

HEM: Fading Silly Season
- Markets herded prices higher without fundamental news
- Wage growth remains inconsistent with inflation targets
- UK persistence is more structural than cyclical
- High wage settlements should delay BoE cuts until 2025
- Underlying EA inflation allows an ECB cut this summer
December 04, 2023

HEM: Persistence Underpriced
- Rate cuts may come next but need not start soon
- Excessive wages raise inflation and activity resilience
- UK persistence is more structural than cyclical
- The BoE can wait until 2025 even if the ECB cuts in July
- Market pricing has become too dovish
November 07, 2023

HEM: Stay Tight for Long Haul
- The BoE, ECB and Fed have likely finished hiking
- High wages are helping economies resist recessions
- Second-round effects particularly support UK inflation
- Rate cuts appear distant, even if they are next
- Elevated neutral rates discourage policy cuts
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