Archive

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

Swedish Rate Pause: Recovery Rising, Risks Remain

• The Riksbank left rates unchanged at 1.75%, matching consensus. Inflation is easing but is still above target, signalling little chance of cuts or hikes in the near term.​
• A weak labour market offset stronger-than-expected Q3 growth. Policymakers are watching household demand closely to assess the durability of the recovery before shifting rates.​
• Ongoing risks from geopolitics, trade, and fiscal policy keep the future rate path uncertain, with market pricing in steady rates through 2026 barring major shocks.

BoE: Hawkish Surprise Set For November

• Markets have erroneously repriced a BoE rate cut as potentially imminent and repeated. Policymakers are tending to surprise hawkishly in the UK and elsewhere recently.
• Downside news on excess inflation is mild, while the activity data have, if anything, exceeded BoE forecasts. Pay growth signals remain strong, not disappointing the BoE.
• Six MPC members have favoured slower easing, inconsistent with a November cut. Fiscal consolidation is unlikely to frontload a shock large enough for the MPC to accommodate.

By Philip Rush

RBA: Cautious Hold in Uncertain Times

• The RBA held its cash rate at 3.6% as anticipated, but its decision marks a shift from easing after September's inflation surprise, signalling an extended pause in rate cuts through at least mid-2026.​
• Central forecasts now project trimmed mean inflation above 3% for the coming quarters before settling at 2.6% in 2027, requiring mildly restrictive policy rates of 3.4% by mid-2026—materially slower easing than many forecasters anticipated.​
• Labour market softening provides limited comfort as elevated vacancies and wage pressures persist. Two-sided uncertainty around demand strength and the global outlook creates risks justifying a cautious approach to future cuts.