Archive

BoE: Bailey Leans Over December Fence

• Another 5:4 vote split broke the BoE’s run of quarterly rate cuts. Governor Bailey is revealed to be the pivotal member, with the others worried about inflation persistence.
• Bailey endorsed market pricing and a forward-looking Taylor Rule path that includes a cut this quarter. His verbal comments imply a presumption in favour of cutting then.
• Upside news over the next two monthly release cycles would be needed to block that December cut. Resistance to cutting should only grow stronger as time passes.

By Philip Rush

Inflation Persistence Constrains Norges Bank

• The Norges Bank held rates at 4% as expected. Core inflation at 3% constrains further cuts despite emerging economic slack in the coming year.
• Governor Bache stressed the bank is "not in a hurry" to cut rates, projecting one reduction annually through 2028. Cuts depend on disinflation progressing as forecast.
• December's new forecasts will be critical—faster disinflation or sharper labour market weakness could accelerate cuts, while persistent inflation could keep rates higher for longer.

Malaysia Defies Regional Easing

• Bank Negara maintained the OPR at 2.75% in November 2025, aligned with forecasts, reflecting confidence in steady 5.2% Q3 growth and contained inflation.​
• The decision contrasts with regional easing trends; the central bank views the current stance as appropriate amid resilient domestic demand and easing tariff uncertainties.​
• Forward guidance indicates rates are likely to be stable through mid-2026, contingent on global trade developments, inflation trends, and US rate shifts.

Rebound To Resilience

• The diverging services PMI and ISM resolved bullishly in October, with activity broadly back to 2024 averages. The ISM headline still looks lower because it is a composite.
• Price balances remain extremely elevated while employment’s weakness has become less acute, skewing the trade-off more hawkishly for any policymaker’s preferences.
• The broader global deterioration in PMIs and unemployment last month also recovered in the latest round of releases. These data are not screaming for any more easing.

By Philip Rush