Downside risks for UK from Omicron appear to be fading
Though the scale of December’s fall in retail sales came as a nasty surprise, it was not simply an Omicron story. We still think the Omicron hit to GDP will be small and short-lived, with the fall in case numbers and evidence of firming social consumption activity in the high-frequency data supporting this view.
What you will learn:
- With downside risks from Omicron fading, February’s MPC meeting is live.
- Andrew Bailey’s comments on the tightness of the labour market were certainly hawkish, and the outcome of February’s meeting looks like a coin toss.
- But we remain sceptical that the data will support more than two 25bp hikes in 2022.
Tags:
Related Research
Post
Summarizing our US election scenarios
During the next presidential term, the economy will receive a net boost from federal policymaking, and inflation will come in stronger, leading to a more cautious easing cycle by the Federal Reserve. This is the takeaway no matter the president and the political balance of power in Congress.
Find Out More
Post
Norway and Sweden: Currency outlooks are gradually improving
We think that the Norwegian krone and the Swedish krona will hold on to their recent gains and appreciate further next year. Following significant volatility recently, a combination of fading domestic risks and favourable external developments will provide support for both currencies. Data surprises present the key risk.
Find Out More
Post
Advanced economies on the cusp of industrial recovery
Our proprietary business cycle phase indicator reveals that industrial activity in the advanced economies, which has been in recession for the entirety of 2023, is on the cusp of recovery.
Find Out More