In today’s briefing:
- Korea: Policy Rate Held At 3.0% (Consensus 2.75%) in Jan-25
- UK: GDP Scrapes Statistical Bottom
- Eurozone Economy: Quarterly Macro Note – December 30, 2024
Korea: Policy Rate Held At 3.0% (Consensus 2.75%) in Jan-25
- The Bank of Korea maintained its base interest rate at 3.00%, defying market expectations of a 25bp cut, citing stabilising inflation and heightened risks from domestic political instability and exchange rate volatility.
- Domestic economic recovery remains fragile, with weak consumption and investment trends, while external challenges, including US protectionist policies and strong dollar dynamics, further constrain growth prospects, projected at 1.9% for 2025.
- Future rate cuts will depend on balancing inflationary stability, financial risks, and economic uncertainties, with the Bank signalling a cautious approach to monetary easing amid volatile domestic and international conditions.
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UK: GDP Scrapes Statistical Bottom
- UK GDP disappointed the consensus again by only rebounding 0.1% m-o-m in November, continuing the stagnation since the election was called and risking a Q4 contraction.
- The services PMI’s December upturn suggests the recovery could extend. That would also be consistent with residual seasonality, which has been closely followed in 2024.
- Recent weakness will help the BoE cut again in February. Reversing this dynamic could make it the last, but we expect another in May before hikes return in 2026.
Eurozone Economy: Quarterly Macro Note – December 30, 2024
- The Euro area economy is approaching the end of the year on a subdued note and facing weakened momentum.
- Surveys indicate modest economic activity with recent Purchasing Managers’ Indexes (PMIs) providing limited optimism through only slight improvements in the composite index.
- Both Germany and France continue to face significant challenges, primarily driven by persistent weaknesses in the manufacturing sector.
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