Wage growth is slowing quickly, at a time when the wider jobs market keeps cooling. The UK is becoming less of an outlier on inflation, and we expect a rate cut on Thursday and two further moves next year
The composite PMI dropped from 52.8 to 51.9 in December, with manufacturing output declining again. Overall, this reading still corresponds to decent GDP growth for the eurozone in the fourth quarter of 2025
Combine rebounding investment with continued strength in private spending and you have a recipe for stronger economic growth. October's set of data suggests that GDP growth in the fourth quarter is likely to beat the 3.7% year-on-year rate posted in the third. At the same time, inflation is declining, which paves the way for another rate cut in December
US jobs growth was stronger than expected in September, but unemployment also rose amid workers returning to the labour market and seeking jobs. Given the Fed's recent hawkish shift and the lack of official data scheduled before the 10 December FOMC meeting, it is understandable that the market thinks the next move won't come until early 2026
Euro rates are near the top of their ranges again. We don't expect the front-end to remain a driver, with now only a 30% chance of an ECB cut priced down the road despite remaining risks around the outlook. Dutch pension reforms appear to help push the 10s30s steeper as dynamics detach from the US curve
We think markets are right to price in more Bank of England easing, but the upcoming budget on 26 November can still bring both bullish and bearish surprises. Meanwhile, concerns around the US job market are offsetting the positive impact of a likely government reopening on risk sentiment
As expected, NBP policymakers delivered their fourth consecutive 25bp rate cut in November, extending the scale of monetary easing this year to 150bp. Rate-setters reacted to lower current inflation, but may pause before a final adjustment to monetary policy. We see two more cuts in the first half of next year, with the target rate at 3.5-4% in 2026
The National Bank of Poland (NBP) has repeatedly warned of upside risks to inflation over the medium term, but this has not prevented the central bank from cutting rates as inflation moderates. Rate-setters have cut rates at each policy meeting since July, and we expect another 25bp cut on 5 November
Yesterday's PMI showed a mixed picture in the region, with the Czech Republic's lower-than-expected, while Poland and Hungary surprised with higher-than-expected readings. Inflation in Turkey surprised the market lower (2.6%/32.9%), in line with our estimate, and inflation returned to a declining trajectory.
Energy price developments have resulted in a tick down in headline inflation, while core inflation remains at 2.4%. Overall, the inflation environment seems to remain very stable around the ECB's target for the moment
Lingering trade-induced uncertainty continues to weigh on Canadian activity and carries risks of broader jobs market deterioration. We expect the BoC to overlook higher-than-expected jobs and inflation data and cut by 25bp on 29 October. The door may be left open to more easing, and CAD should remain vulnerable against most of the G10
Seemingly defying a backdrop of high uncertainty even by the ECB’s own accounts, volatility in markets continues to decline. On the surface, it may look like complacency. But a perceived limited upside in rates, and a potentially bigger downside if they were to actually start falling, also gives spreads their backing
The tone of NBP President Adam Glapinski’s press conference suggested openness to another interest rate cut in November. The new inflation projection, and macroeconomic data published before the November Council meeting will be important in shaping this decision. We assess the probability of another cut in November to be well above 50%
The just-released minutes of the ECB’s September meeting show a unanimous decision to keep interest rates on hold, viewing this approach as the most appropriate response to ongoing elevated uncertainty
Despite inflation nearing double digits and real rates staying negative, the National Bank of Romania (NBR) is expected to maintain its cautious stance at its 8 October meeting, prioritising stability amid weakening consumption and uncertain growth prospects
We expected CPI inflation to increase slightly in September from August amid a shallower annual decline in fuel prices – but low food prices surprisingly kept the headline figure unchanged, bolstering the argument for more rate cuts. Even so, we expect the National Bank of Poland (NBP) to postpone the move until November
The composite PMI increased from 51 to 51.2 in September, indicating that the economy maintained a modest pace of growth in the third quarter
Inflation in the eurozone ticked up from 2% to 2.1% in August on the back of slowing energy price declines. Core inflation remained unchanged at 2.3%, confirming a rather stable inflation climate despite ample risks to the outlook
We don't think markets should dismiss another European Central Bank rate cut as eurozone inflation starts to drift below target. At the same time, the prospect of recovering growth – boosted by the German fiscal situation – should keep the back end anchored higher. We therefore see steeper curves in the near term
The just-released minutes of the ECB’s July meeting show that the central bank entered the summer break with a strong feeling that the job was done and that the bar had been set high for another rate cut. Still, this wait-and-see stance had at least a touch of an easing bias
The Bank of Korea held policy rates at 2.5%, with a dissenting vote raising expectations for an October rate cut. The BoK’s cautious growth view also suggests more rate cuts may be on the way in 2026
The Australian dollar is showing limited movement on Tuesday. In the European session, AUD/USD is trading at 0.6482, down 0.01% on the day.
Polish headline inflation has been confirmed at 3.1% YoY in July, from 4.1% YoY in June, as the effect of the partial unfreeze of energy prices in mid-2024 died out. With inflation within the tolerance band of the National Bank of Poland's target (2.5%, +/- 1ppt), the central bank now has room to continue its monetary easing cycle
The dollar dropped for the second day in a row on Wednesday. This came after U.S. inflation data raised hopes for a Federal Reserve rate cut next month, and President Donald Trump's push for lower rates added more pressure on the dollar.
Thursday likely sees US PPI core inflation back up to 3%, while core CPI inflation was confirmed earlier this week at 3.1%. In all probability these inflation rates will be on the rise in the coming months, and can easily touch 4%. We see, for example, how proposed eSLR changes are good for Treasuries. But Treasuries can't fully ignore evolving inflation data
The other main event overnight has been the RBA’s latest policy meeting. The RBA decided to leave their policy rate unchanged at 4.10% as expected after delivering the first rate cut in the easing cycle at the previous meeting in February.
At its last meeting in January, Norges Bank’s Monetary Policy Committee kept the policy rate unchanged at 4.5% but reiterated the guidance that “the policy rate will likely be reduced in March”. Since then, spot activity data remained subdued, but the labour market showed signs of resilience and business expectations turned more positive.
The US dollar has weakened modestly start the start of this week resulting in the dollar index falling back below the 104.00-level. The main trigger has been Bloomberg report stating that President Trump’s plans for a “Liberation Day” tariff announcement on 2nd April is poised to be more targeted according to aides and allies.
The SEK remains the G10 FX outperformer MTD, although the NOK and EUR have closed the gap to the top this week. Of special note, EUR/SEK has failed to extend the multi-year lows reached a week ago in spite of EUR/USD having rallied past last November’s peak of c.1.0937.
Yesterday, the ECB lowered its GDP forecasts for this year and next, confirming a downward trend in forecast revisions.US tariffs and fiscal stimulus in Germany represent opposing risks for GDP trajectory.
