Archive

March 19, 2025
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EA Inflation Shrunk For Spring 2025

  • Eurostat shrunk the final Euro area inflation print for February by 5bp, rounding it down to 2.3% after German revisions, reversing the upward surprise from the flash release.
  • French energy utility prices drove this decline, and petrol prices seem set to drag it down further in March. However, the median impulse is also relatively subdued.
  • ECB policy is unlikely to be affected by this revision and the temporary impact of energy prices on inflation. We still expect it to hold rates in April before a final cut in June.

By Philip Rush

March 18, 2025
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UK Inflation Excess Survives Reweighting

  • Updated inflation basket weightings can shift the inflation outlook without any new fundamental shock. The seasonal and trend outlook is unaffected by the 2025 update.
  • Although our forecast is broadly unchanged, this still mitigates the risk that reduced weights on energy and sanitation utilities dampen the surge in April and July forecasts.
  • This outcome further emboldens our confidence in our above-consensus forecast. We also note that the average import intensity is now weighted near historic lows.

By Philip Rush

March 17, 2025
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EU: Defence Spending

  • The EU faces two imminent deadlines in determining defence spending. On 20 March, the Commission presents its full loans-for-arms proposal to a divided European Council, and on 24 March, the ‘old’ Bundestag will step down, after which easing Germany’s debt brake becomes even harder.

By Alastair Newton

March 13, 2025
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Heavy Metal Trade War

  • Volatility in US trade policy continues a cleaner tightening trend against China in the well-established tech war. Tariffs are a tool, but so are export restrictions.
  • China expanded restrictions on rare earth mineral exports to license critical materials like tungsten. The West lacks friendly suppliers and struggles to develop alternatives.
  • European defence investments may flounder. Japan and Korea may also suffer, so they can indirectly frustrate the US. Aggressive trade policy hits volumes as well as prices.

By Philip Rush

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