Archive

HEW: Inflation Persists, But Cuts Loom

• Persistent upside inflation surprises and sticky wage growth are lifting hawkish market narratives, defying central bank and consensus hopes for a quick return to target.
• UK inflation jumped well above forecast in June, strengthening the hawkish case, while US core inflation shows tariffs adding to excessive underlying price pressures.
• Next week, attention turns to the ECB decision, July flash PMIs, and UK public finances, as markets weigh central banks’ willingness to ignore resurgent inflation.

By Philip Rush

UK Jobs Data And The Muddled MPC

• UK payroll revisions removed most of May’s weakness, while wage and price inflation is too fast, yet the BoE probably won’t back down from an August cut as the UR rises.
• Fewer payroll inflows explain its downtrend, with <24yo suffering sustained pain, but the 25-64yo endure the taxation hit, structurally raising unemployment by ~0.5pp.
• Wage growth isn’t showing signs of new disinflationary demand pressures, so we expect excessive underlying wage and price trends to persist, not helped by an August BoE cut.

By Philip Rush

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

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.