Archive

April 18, 2024
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BoE Should Move Behind the Fed and ECB

  • Hawkish surprises in the UK and US data pushed back rate cut pricing. Dovish comments from Bailey still weigh on BoE rates, inappropriately keeping pricing below the Fed.
  • Underlying inflationary pressures are worse in the UK, where wage growth is persistently high and not backed by productivity, causing the UK’s services inflation to be higher.
  • Prevailing policy settings don’t seem set to drive down UK inflationary pressures before the US. Unemployment is trending similarly, suggesting similar monetary tightness.

By Philip Rush


April 11, 2024
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ECB Loosely Tied to Cut in June

  • The ECB maintained its policy rates and did not pre-commit to a June cut. However, a few members wanted to cut now, and the statement added explicit conditionality.
  • Guidance now ties the ECB to a June cut, albeit with ongoing data dependence preserving wriggle room. Sticky services inflation and Fed rates won’t stay its hand.
  • Resilient data are rolling back Fed views to our September call, but we now doubt the ECB will want to delay past June. The BoE would probably only then wait until Nov-24.

By Philip Rush


April 10, 2024
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US CPI Inflation 3.48% y-o-y (consensus 3.4%) in Mar-24

- US CPI inflation in March 2024 increased to 3.48% y-o-y, exceeding the consensus forecast again, pointing to a more persistent inflation problem.
- Core CPI inflation also surprised on the upside by remaining at 3.8% y-o-y on a 0.4% m-o-m increase in March 2024.


April 04, 2024
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US Politics: Sticking With Joe (For Now?)

  • The shape of the US presidential election has become much more apparent in the past three months. However, the commentariat’s recent tilt towards a Trump victory seems premature and unsupported by the facts. I am, therefore, ‘sticking with Joe’ for now, at least.

By Alastair Newton