Category: Weekly Round Up

Markets take benign view of Trump Presidency

Equity market gains and expectations the Fed will be more cautious in cutting official interest rates suggest that whilst investors expect fiscal stimulus and pro-growth deregulation from the new Trump administration, they are not, for now, pricing in a damaging global trade war. On that point, the Washington based Peterson Institute has estimated Trump’s proposals […]

UK Budget leaves difficult questions unanswered

Yesterday’s UK Budget left many questions unanswered. The additional £70bn of public spending will provide a stimulus to the UK economy in 2025, even after £40bn of tax rises. The Office for Budget Responsibility estimates the net £30bn giveaway (1% of GDP) will add 0.5 percentage points to GDP growth in 2025, but the overall […]

PMIs add to concerns on health of Euro Area economy

This week’s composite PMI at 49.7 in October, served to accentuate fears on the Euro Area’s growth prospects for 2025. In this context, the ECB is expected to revise down its projection for 1.3% GDP growth in 2025 so markets are fully pricing in a further 25bp rate cut at the December 12th policy meeting, […]

Evidence UK inflation pressures easing hits sterling

Markets had expected the Bank of England to lag behind other central banks in cutting rates through to the end of 2025, mainly due to evidence of persistent inflationary pressures. However, this week saw both UK private sector regular pay growth (4.5%) and CPI inflation(1.7%) ease. Hence, investors now expect the Bank of England to […]

MyHome Asking Price Inflation 7.5% in Q3 2024

The MyHome report, in association with Bank of Ireland, was published this week. Asking price inflation accelerated to 7.5% in Q3 2024, a two-year high. Perhaps ever more striking were data showing transactions in September were being settled on average 8% above the original asking price, and for one-in-seven homes, 20% or more above, illustrating […]

Budget 2025 delivers €10bn package

Today’s Budget for 2025 largely stuck to the script. The Government still plans the €8.3bn of spending rises and tax cuts it flagged in the Summer Economic Statement, but also implemented a fresh €2bn ‘cost-of-living‘ package that will hit households in Q4 2024. Income tax cuts worth €1.6bn will also boost disposable incomes at the […]

Irish economy beginning to feel competitiveness pressures

This week we published new Irish economic forecasts; downgrading projections for both GDP(-1%) and modified domestic demand (2.3%) growth in 2024, but mainly on the back of statistical distortions and volatile data. The bigger picture is that Ireland’s exceptional pace of employment (2.7%) and population (1.9%) growth has continued in H1 2024, ahead of our […]

Weak economic outlook for euro area

Yesterday’s decision by the ECB to cut its deposit rate by a further 25bps to 3.5% came as no surprise to markets. The overnight index swap curve now implies the ECB will cut the deposit rate at least once more in 2024, falling to 3.12% in December and to 1.85% by end-2025. Perhaps more striking […]

Central Banks set to cut rates through 2025

This week we published our latest Bank of Ireland, Global Markets Watch. A key theme is that confidence has grown amongst financial market participants in recent months that CPI inflation rates are durably returning to central banks’ 2% targets. In part, this reflects tentative signs that the US economy is slowing, accompanied by the temporary […]

Earnings continue to rise steadily

Earnings data shows that wages continue to rise but at a relatively modest pace considering the recent period of elevated inflation post pandemic. Hourly earnings rose by 5.4% year-on-year (y-o-y) to €29.71 in Q2. However, as inflation has fallen back considerably now, real incomes are rising steadily, and with inflation set to remain low, there […]