Archive

UK Electoral Hopes Rise In Asian Victories

• Landslide victories for recently appointed Prime Ministers calling snap elections in Japan and Thailand offer hope to Labour MPs hoping Keir Starmer stands aside soon.
• Peter Mandelson’s conduct is damned in the Court of Public Opinion, including evidence that he was unfaithful to his political colleagues and husband. Starmer can’t escape it.
• Leadership challengers aren’t ready yet, so Starmer remains likely to limp on longer. But change will bring fiscal easing that the dovish BoE fails to anticipate adequately.

By Philip Rush

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