Archive

RBI Locks In a Long Pause at 5.25%

• The RBI holds its repo rate at 5.25% with a neutral stance, in line with consensus expectations, signalling a likely extended pause in the rate cycle.
• Future rate moves hinge on CPI inflation, the durability of 7% growth and global shocks. The RBI wants a clearer inflation path before cutting.
• Elevated real rates and patchy transmission mean policy will lean on liquidity tools, with scope for rate action only if the data shift materially.

BoE: Presumptive Doves Fly

• The MPC held rates in a shockingly finely balanced 5:4 vote again. Assumptions in the analytical boxes were uniformly dovish and widely cited as driving the dovish flight.
• We see target-consistent wage growth lower, only partly because of productivity. Fiscal policy will not match tight plans, and elevated expectations can’t be assumed away.
• Only one of the two members open to cutting soon is needed to deliver it. We no longer see enough time for dovish assumptions to be disproved, making a late April cut likely.

By Philip Rush

ECB Holds in a ‘Good Place’

• The ECB holds rates at 2%, as expected, signalling a high bar for moves and reinforcing a data‑dependent, meeting‑by‑meeting stance.
• Inflation is below 2%, but core and wages are still firm, keeping easing and tightening risks balanced, and anchoring a “higher for longer” bias.
• A stronger euro, global demand shocks or sticky services inflation will be decisive for any future shift away from the current rate plateau.

Banxico’s Cautious Pause at 7%

• Banxico held the policy rate at 7%, as expected, and signalled a data‑dependent, higher‑for‑longer stance after revising inflation forecasts upward.
• Convergence to the 3% target is delayed to Q2 2027, with core and services persistence, fiscal shocks and FX volatility key to the timing of any renewed cuts.
• Weak growth supports future easing, but Fed policy, peso moves and the inflation expectation anchor will determine how soon and how far rates can fall.