Archive

June 05, 2023
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HEM: Persistence Matters

  • Avoiding recession prolongs problematic excesses
  • Second round effects are especially bad in the UK
  • We expect two more ECB and BoE hikes (upside risks)
  • The BoE-Fed spread may have gone too far in 2023
  • Tightness should extend by being slow to cut rates
May 03, 2023
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HEM: Tighter For Longer

  • Excess demand decays slowly through flat activity
  • Underlying inflation is not breaking back to target
  • BoE hikes in May and June may be followed in August
  • The ECB’s problem is less bad, but it has further to go
  • Persistence of past policy will discourage future cuts
April 04, 2023
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HEM: Unbroken Excesses

  • Bank failures haven’t ended resilient excess demand
  • Underlying inflation remains excessive
  • We expect another BoE 25bps rate hike in May
  • The ECB probably has at least another two hikes left
  • Rate cuts can wait until policy success is clear in 2024
March 01, 2023
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HEM: Rejuvenated Hiking

  • Resilient activity stops cyclical excesses from ending
  • Underlying inflation is inconsistent with targets
  • Hikes can’t stop until excess resilience is broken
  • Multiple BoE and ECB rate hikes remain likely
  • Stimulus can wait until 2024, then be aggressive

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