Archive

BoE: Hawkish Surprise Set For November

• Markets have erroneously repriced a BoE rate cut as potentially imminent and repeated. Policymakers are tending to surprise hawkishly in the UK and elsewhere recently.
• Downside news on excess inflation is mild, while the activity data have, if anything, exceeded BoE forecasts. Pay growth signals remain strong, not disappointing the BoE.
• Six MPC members have favoured slower easing, inconsistent with a November cut. Fiscal consolidation is unlikely to frontload a shock large enough for the MPC to accommodate.

By Philip Rush

RBA: Cautious Hold in Uncertain Times

• The RBA held its cash rate at 3.6% as anticipated, but its decision marks a shift from easing after September's inflation surprise, signalling an extended pause in rate cuts through at least mid-2026.​
• Central forecasts now project trimmed mean inflation above 3% for the coming quarters before settling at 2.6% in 2027, requiring mildly restrictive policy rates of 3.4% by mid-2026—materially slower easing than many forecasters anticipated.​
• Labour market softening provides limited comfort as elevated vacancies and wage pressures persist. Two-sided uncertainty around demand strength and the global outlook creates risks justifying a cautious approach to future cuts.