Archive

January 25, 2024
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ECB Cuts Are Too Premature To Discuss

  • The ECB not only maintained its policy rates as expected but almost repeated its December announcement verbatim. It is not falling in line behind market pricing.
  • Discussion of rate cuts was considered premature. Low unemployment is recognised, as is the risk of excessive wage growth, so it needs to see more evidence before cutting.
  • A first cut in June is probably the ECB’s working assumption. However, some global economic resilience amid higher neutral rates still delays our forecast to Q3.

By Philip Rush

January 24, 2024
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Global Policy Isn't Squeezing That Tight

  • Surprising strength was broadly experienced across the flash PMIs for January. Demand growth is rebounding rather than slowing, prolonging inflationary excess demand.
  • Unemployment rates should rise with below-potential growth, but they broadly remain below their pre-pandemic levels and have mostly stopped falling rather than risen.
  • The failure of tight labour markets to loosen suggests global policy isn’t set far above a neutral level. That should postpone cuts and limit their future extent.

By Philip Rush

January 22, 2024
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Outlook 2024: The Big Issue, Part 3

  • Forecasters are shying away from predicting the outcome of the US election. However, it may not be that complicated, the key determinant being the economy. Joe Biden should win a second term if the Fed cuts rates early in 2024 and the Administration sharpens its messaging. If not…

By Alastair Newton

January 15, 2024
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Outlook 2024: Lower For Longer Redux

  • With non-Opec+ output likely to exceed consumption growth, the cartel will struggle to keep Brent above USD80pb even in the event of something close to consensus economic growth in China and a probable soft landing in the US. My forecast for 31 December is USD70pb.

By Alastair Newton

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