Archive

April 17, 2025
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ECB: Cutting In Shadow of Shocks

  • The ECB’s seventh 25bp deposit rate cut to 2.25% risks becoming stimulative, but the shock from US trade policy seen through market moves demanded a response.
  • Central bankers are no more aware of the trade policy outlook than markets, but they are more aware of the potential inflationary effects and limits to effective easing.
  • Time will reveal the tariffs and impact, allowing the agile ECB to tackle this rather than just the shadow it has cast on anticipatory market pricing. We still expect a June cut.

By Philip Rush

April 16, 2025
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EA Disinflation Confirmed For ECB Doves

  • An unrevised final HICP print confirmed the disinflationary space driving the ECB to cut again in April, despite growing desire to slow easing before it becomes stimulative.
  • The median inflation impulse remains at, or slightly below, the target. However, other statistical measures are stickier and labour costs are fundamentally growing too fast.
  • EURUSD appreciation compounds disinflationary energy price pressures to trigger another likely slowing in April that might dovishly surprise the consensus again.

By Philip Rush

April 14, 2025
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US Tariffs: Of Words And Bonds

  • Although Donald Trump’s U-turn may allow time for the conclusion of bilateral trade negotiations with some US partners, neither China nor the EU is likely to strike an agreement imminently, especially now that America’s vulnerability to the bond market has become all too clear.

By Alastair Newton

April 07, 2025
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US vs EU: Worse to Come

  • The response to ‘Liberation Day’ by policymakers and investors alike still falls short of appreciating the scale of the threat posed by the US, as ‘transactional Trump’ is succeeded by a president who seeks to turn the clock back to a supposedly golden era in his quest to make America great again.

By Alastair Newton

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