Archive

April 02, 2025
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Tariff Transition Smoothing

  • President Trump's tariffs embed structural cost pressures, compounding supply chain changes and creating a stagflationary shock central banks cannot offset.
  • Potential retaliation risks raising inflation expectations, constraining the extent to which monetary policy can smooth transitional pains through temporary easing.
  • We still believe any dovish policy imperative is likely to be short, shallow, and reversed, with central banks forced to remain flexible and focused on shorter horizons again.

By Philip Rush

April 01, 2025
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EA Disinflates March’s Excess

  • Euro area inflation slightly undershot consensus expectations in March, consistent with the correlation of surprises and energy prices. Yet it was 7bps above our forecast.
  • Services prices drove core inflation down to 2.4%, creating some dovish space. However, the headline outcome reversed last month’s upside to match February forecasts.
  • Resilience in the real economy still justifies more cautious easing close to neutral, so we expect graduated cuts to skip April for June, but the risk of an extra cut has risen.

By Philip Rush

March 27, 2025
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US Tariffs: No Fooling!

  • The announcement of individual reciprocal tariff rates for US trading patterns on 2 April is rightly seen as a watershed moment for investors. Nevertheless, in a drive to re-industrialise America, it may well prove to be no more than the end of the beginning in a protracted trade war.

By Alastair Newton

March 26, 2025
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UK: Low CPI As Seasonal Sales Extend

  • UK CPI inflation slowed by 15bps to 2.84%, rounding slightly under expectations. The services rate was surprisingly resilient, and January’s upside news broadly persisted.
  • Downside news from clothing and core goods prices occurred because January sales extended broadly and unusually. Postponed Spring lines should drive a March rebound.
  • Headline inflation outcomes are benign enough not to threaten the BoE’s likely cut in May, but ongoing resilience still makes that the final move in our forecast.

By Philip Rush

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