Archive

January 15, 2025
2025-01-15 UK_head.png

UK Airfares Disinflate Before Christmas

  • UK inflation slightly undershot our below consensus call as airfares were even softer than we assumed. The early index date missed the expensive festive period.
  • Airfares distort core and services inflation even more, but 70% reliably unwinds in January. Meanwhile, the monthly median inflation impulse annualised above 3% again.
  • The BoE ignores airfare distortions when convenient, with the lower outcomes fitting its bias to cut rates again in February. Excessive easing may need reversing in 2026.

By Philip Rush


January 15, 2025
ID.png

Indonesia: 25bp Rate Cut to 5.75% (Consensus 6.0%) in Jan-25

  • Bank Indonesia lowered the BI-Rate to 5.75%, surprising consensus expectations. It cited low inflation and the need to support growth amid subdued domestic demand and stable external conditions.
  • The Rupiah remains relatively stable due to robust reserves and proactive interventions, although global pressures from US fiscal policies and limited FFR cuts pose risks to external stability.
  • Future policy adjustments will hinge on domestic growth performance and global financial developments, with continued emphasis on macroprudential measures, financial digitalisation, and fiscal coordination to strengthen economic resilience.

January 14, 2025
2025-01-14 Rates_head.png

2025: In Like A Dove, Out Like A Hawk

  • Ongoing economic resilience strengthens the conviction in our long-held view that neutral policy rates are high. Rate cuts outside of a recession are usually reversed.
  • Market pricing aligns with our previously contrarian rate view. As the end of the cutting cycle approaches, pricing should embed the possibility of hikes like in 1998-99.
  • We expect at least the Fed and BoE to hike their policy rates in 2026, with the debate beginning in 2025 and potentially crystalising in a move later this year.

By Philip Rush


January 13, 2025
2024-13-01 AN_head.png

Europe: Chaos ex Machina

  • Political uncertainty in Berlin and Paris has created a leadership vacuum in Europe which will not be filled in the foreseeable future. In Germany, investors are getting ahead of the political reality over prospects for reform of the debt brake. France faces another indecisive legislature election in mid-year as Marine Le Pen looks to pressure Emmanuel Macron into stepping down early.

By Alastair Newton