Archive

HEW: Steady Start To 2026

• UK GDP data set Q4 up to match Q3, while monthly US inflation held in December precisely where it was before the shutdown noisily disrupted the dataflow.
• The case for easing remains thin, and there isn’t much scope to change that before the next decisions. The BOK delivered the year’s first policy news by cutting its easing bias.
• Next week’s UK inflation data will be dampened by prices being sampled too early for Christmas surge pricing. It's broadly a busy week for UK and Euro area data.

By Philip Rush

UK: Turning the Statistical Corner

• The UK GDP surprise flipped to exceed expectations with 0.3% m-o-m growth in Nov-25 as residual seasonality turned past its trough. We now track 0.14% q-o-q for Q4.
• Further upside news is likely over the next few months as output surges again in Q1, pushing back dovish hopes for another rate cut. We still see the cutting cycle as over.
• Economists prefer to tell fundamental stories, ignoring statistical ones, but we should not be shocked by the impact of the predictable surprises created by this shortcoming.

By Philip Rush

Currency Constraint Ends Korea's Easing Cycle

• The BoK held the policy rate at 2.50%, in line with consensus, but effectively ended the easing bias, signalling a prolonged on-hold stance for 2026.​
• Despite improving growth and near-target inflation, FX weakness and financial stability risks limit the scope for future cuts and keep rate hikes a low-probability tail risk.​
• Housing and household debt vulnerabilities mean any change in the 2.50% rate will hinge on clearer won stabilisation and a sustained, benign inflation trajectory.

US Inflation Resumes Without Payback

• US inflation resumed its monthly trend in headline, core, and underlying services after nonsensical methodological noise around the shutdown, including non-collection itself.
• Payback from late sampling in November didn’t have an apparent inflationary effect, perhaps because the gap between collections didn’t leave long for other prices to rise.
• Surprises are skewing lower, but inflation is stuck above the target, so there isn’t a compelling case to cut again. We still expect the Fed to hold rates in January.

By Philip Rush