July 16, 2025

UK CPI Lifts Hawkish Case in June
- UK inflation surged 0.2pp beyond the consensus again in June, with underlying inflation measures broadly inconsistent with the target and headlines moving the wrong way.
- The consensus is failing to learn the lesson of intense underlying pressures. The CPI rate rose 0.6pp since Jan instead of falling 0.4pp and is 1.4pp higher than called a year ago.
- Policymakers seem infected with dovish fear about the labour market ahead of August’s meeting. CPI is 0.9pp higher in our year-ahead forecast, and we were right a year ago.
By Philip Rush
July 16, 2025

Indonesia: 25bp Rate Cut To 5.25% (Consensus 5.25%) in Jul-25
- Bank Indonesia cut its benchmark rate by 25bp to 5.25% in July 2025, marking the fourth easing since September amid low inflation and strong foreign exchange reserves.
- The decision reflects confidence in 1.87% June inflation staying within the 2.5±1% target range, the stable rupiah supported by a robust intervention framework, and the need for growth stimulus.
- Future easing depends on continued inflation anchoring, currency stability, and global developments, including US trade policy and Federal Reserve actions affecting capital flows.
July 15, 2025

US Inflation Creeps In Quietly
- Rebounding headline and core US inflation in June understated the underlying growth, with shelter rising at its slowest pace since August 2021. Tariff pain crept in belatedly.
- Commodities, less food, energy and car prices grew by 0.3% m-o-m, the fastest since Feb-23, and services (ex-shelter) hit 0.4% m-o-m, both inconsistent with the target.
- Less than half of the post-election surge in expectations has survived so far. Further rises remain likely, even if sustained avoidance smooths and reduces the full impact.
By Philip Rush
July 14, 2025

Tuning Tariff Impact Estimates
- President Trump’s tariff policy seemingly follows a random walk with a drift towards deals. Path dependency raises risks and uncertainty around his volatile whims.
- Corporate avoidance measures have spared their customers from most of the pain, but Vietnam’s deal as a template could belatedly bring more of the pain to bear.
- We assume most countries stay at 10%. The impact of others rising to 20% may be smaller than the anti-avoidance hit, with the total now worth less than 0.4% to UK GDP.
By Philip Rush
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