Archive

November 07, 2023
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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
October 02, 2023
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HEM: Autumn Lifts EU Gloom

  • Cuts are rolling back while neutral rates grind higher
  • Residual seasonality overstates EA/UK summer gloom
  • Underlying inflation is close to the target
  • Excess wage growth encourages a final BoE hike
  • We still see limited cuts only coming after a long wait
September 04, 2023
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HEM: Cuts Can Wait for Godot

  • The BoE-Fed “Icarus Spread” has melted further
  • Disinflation is not yet on course to meet targets
  • Wage growth pushes BoE hikes as the ECB pauses
  • Policy doesn’t look too tight amid resilient activity
  • High neutral rates mean cuts can roll later
August 07, 2023
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HEM: Persistent Policy Peaks

  • The BoE-Fed “Icarus Spread” has crashed to earth
  • UK excess is less special outside wage settlements
  • BoE hikes have further to go, but the ECB may pause
  • Resilient activity data don’t justify turning looser
  • Global rate cuts will be slow to a high neutral level

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