Archive

HEW: BoE Goes Its Own Way

• The BoE refused to behave like its peers this week, with a significant dovish shift in the vote despite a lack of news, even as others settle on holding steady or even hiking.
• Those doves overshadowed the ECB’s calm stability after inflation matched forecasts by dipping to 1.7% in January. Disappointing US labour market news drove rates down.
• Next week’s slightly delayed payrolls (and CPI) releases will help reveal the relevance of this week’s noisy signals. We also await UK GDP data turning in residual seasonality.

By Philip Rush

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.