Archive

January 15, 2025
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US CPI Excess No Worse Than Peers

  • Headline US inflation aligned with the consensus for December, although the core rate was marginally weaker, challenging the prevailing hawkish Fed narrative.
  • Expectations have been repeatedly marked higher in recent months, with the outcome exceeding most previous vintages, except those made during Q2 2024.
  • Persistently excessive inflation data threatens the Fed’s cutting cycle, although the US economy is not the hawkish outlier often assumed and embedded in market pricing.

By Philip Rush

January 07, 2025
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EA Inflation Peak Is Surmountable By ECB

  • Euro area inflation increased again in December by 21bp to 2.44% y-o-y as national surprises balanced despite Germany’s shocking surge.
  • The loss of energy price disinflation drove the headline rise while core inflation was stable, although services inflation increased to 4% again.
  • Pressures on prices and the ECB should ease over the next two months, making the peak surmountable for another cut in January. We see risks skewed toward a policy pause.

By Philip Rush

December 18, 2024
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UK Inflation Extends Broad Rebound

  • UK inflation matched expectations by increasing to its highest headline pace since March, although this doubled the BoE’s forecast error to 0.2pp (0.1pp in services).
  • Only one division contributed much less to the monthly impulse than last year, with the median rate remaining excessive at 3% amid broadly high unit labour cost rises.
  • An early December index date will likely be used, weighing on airfares in the short term. Our forecast still gaps higher than others in 2025 despite the consensus rising.

By Philip Rush

December 18, 2024
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EA Inflation Less Excessive Near Peak

  • The final Euro area inflation print for November trimmed its rise by 4bps, rounding it down to 2.2% y-o-y. Revisions were broadly spread over the special aggregates.
  • Median inflation remains close to annualising at 2%, although Germany is excessive like the UK. Our projections for underlying pressures softened slightly over the past month.
  • In our view, EA inflation will still slow to the 2% target in a few months and stay near there through 2025. Forceful ECB easing could break that benign outlook.

By Philip Rush

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