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  • Australia private sector credit growth steady in November

    Australia Private Sector Credit for November 2025: +0.6% m/m

    • expected +0.6%, prior +0.7%

    Summary

    • Credit growth matched expectations in November
    • Lending remains steady, as do rates for now

    • Limited implications for RBA policy

    Australia’s private sector credit growth held steady in November, offering little in the way of fresh signals for monetary policy but reinforcing the view of a cautiously expanding credit environment.

    Data published by the Reserve Bank of Australia showed private sector credit rose 0.6% month-on-month in November, in line with market expectations and only marginally softer than the 0.7% increase recorded in October. The result points to stable borrowing conditions across the economy, with neither a sharp acceleration nor a meaningful slowdown in credit demand.

    Private sector credit is a broad measure capturing lending to households and businesses, and is closely watched as an indicator of financial conditions, economic momentum and the transmission of monetary policy. Sustained strength in credit growth can signal rising demand and inflationary pressure, while weakness may point to tighter financial conditions and slowing activity.

    The November reading suggests that stable interest rates continue to restrain borrowing at the margin, but have not triggered a sharp contraction in credit. Household balance sheets remain relatively resilient, while business borrowing appears steady, supported by ongoing investment needs and population-driven demand.

    For the RBA, the data is unlikely to materially shift the policy outlook on its own. Credit growth at this pace is broadly consistent with an economy growing modestly below trend.

    From a market perspective, private sector credit is best viewed as a secondary indicator, offering confirmation rather than a catalyst. FX and rates markets tend to respond more directly to inflation, wages and labour market data, with credit figures used to validate broader narratives around growth and financial conditions.

    Still, the steadiness of credit growth matters at the margin. A sustained deceleration would strengthen the case for eventual easing, while any renewed acceleration could reignite concerns about household leverage and inflation persistence.

    This screenshot shows the dates of Reserve Bank of Australia policy meetings coming in 2026.

    This article was written by Eamonn Sheridan at investinglive.com.

  • PBOC is expected to set the USD/CNY reference rate at 7.0378 – Reuters estimate

    The People’s Bank of China is due to set the daily USD/CNY reference rate at around 0115 GMT (2115 US Eastern time), a fixing that remains one of the most closely watched signals in Asian foreign exchange markets.

    China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours.

    Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader international FX conditions, and domestic economic considerations such as capital flows, growth momentum and financial stability objectives. The midpoint is not a purely mechanical calculation, allowing policymakers discretion to guide market expectations.

    Once the midpoint is announced, onshore USD/CNY is free to trade within the allowable band. If market pressures push the yuan toward either edge of that range, the central bank may step in to smooth volatility. Intervention can take the form of direct buying or selling of yuan, adjustments to liquidity conditions, or guidance through state-owned banks.

    As a result, the daily fixing is often interpreted as a policy signal rather than just a technical reference point. A stronger-than-expected CNY midpoint is typically read as a sign the PBOC is leaning against depreciation pressure, while a weaker fixing for the CNY can indicate tolerance for a softer currency, often in response to dollar strength or domestic economic headwinds.

    In periods of heightened global volatility, such as shifts in US rate expectations, trade tensions or capital flow pressures, the fixing takes on added significance. For investors, it provides insight into Beijing’s currency priorities, balancing competitiveness, capital stability and financial market confidence.

    This article was written by Eamonn Sheridan at investinglive.com.

  • Goldman Sachs expects the BoE to cut rates by 25bp in March, June and September 2026

    Summary

    Goldman expects three BoE cuts in 2026

    • In March, June and September, from their previous forecast of a cut in each of February, April, and July.
    • Labour market weakening supports easing
    • Inflation seen remaining contained

    The Bank of England’s decision to cut interest rates on 18 December has reinforced expectations that the UK central bank is entering a more sustained easing cycle, with Goldman Sachs continuing to forecast multiple rate cuts through 2026 amid weakening economic momentum.

    In a research note, Goldman said it expects the BoE to deliver 25 basis point cuts in March, June and September, revising its earlier call that had pencilled in moves in February, April and July. The shift in timing reflects the bank’s assessment that the Monetary Policy Committee (MPC) will proceed cautiously but steadily as evidence mounts that inflation pressures are easing and labour market conditions are deteriorating.

    Goldman argues that recent UK data has increasingly tilted risks toward a softer growth outlook. Labour market indicators have shown signs of cooling, including slower hiring, rising unemployment risks and easing wage pressures. At the same time, the bank expects inflation to remain well-behaved through 2026, reducing the need for the BoE to maintain a restrictive policy stance.

    While markets currently price a gradual pace of easing, Goldman sees scope for the BoE to cut rates more aggressively than investors anticipate if incoming data continues to confirm these trends. The bank notes that weak activity data could give policymakers greater confidence to lean dovish, particularly if inflation expectations remain anchored.

    The December cut marked a shift in the BoE’s policy narrative, signalling that the balance of risks has moved away from persistent inflation and toward supporting growth. However, policymakers are expected to retain a data-dependent approach, closely monitoring wage dynamics, services inflation and broader financial conditions.

    From a market perspective, the evolving BoE outlook has implications for UK rates, sterling and relative monetary policy divergence. A faster or deeper easing cycle would likely weigh on the pound while supporting UK risk assets, particularly if global central banks move more cautiously.

    Overall, Goldman’s revised forecast underscores growing confidence that the BoE’s tightening phase is firmly over, with the next challenge centred on calibrating the pace and depth of rate cuts as the UK economy navigates a softer growth environment.

    This article was written by Eamonn Sheridan at investinglive.com.

  • UK consumer confidence rises in December but remains deeply pessimistic

    United Kingdom GfK Consumer Confidence for December 2025: -17

    • vs. expected -18, prior -19

    Summary

    • Improved modestly in December
    • Budget restraint and easing inflation offered support
    • Spending remains weak despite real wage gains

    British consumer confidence edged higher in December, reaching its joint-highest level of the year, though sentiment remains weak by historical standards, according to a closely watched monthly survey from GfK.

    The GfK consumer confidence index rose to -17 in December, matching levels last seen in October and August. The reading marks the strongest level since August 2024, shortly after the Labour government took office, but still points to a cautious and fragile consumer backdrop.

    The modest improvement followed Chancellor Rachel Reeves’ annual budget, which imposed relatively few immediate tax increases on households. While the budget raised Britain’s overall tax burden by around £26 billion per year, this was notably smaller than the £40 billion increase announced in 2024, and much of the additional tax impact will not take effect until later years.

    GfK noted that households’ assessment of the general economic outlook improved more than perceptions of their own personal finances. Encouragingly, consumers’ willingness to make major purchases recorded the largest gain among the survey’s components, suggesting tentative signs of easing caution.

    Commenting on the data, GfK consumer insights director Neil Bellamy likened consumers to “a family on a festive winter hike,” moving forward slowly while hoping for better conditions ahead, a metaphor that captures both resilience and ongoing uncertainty.

    The confidence uptick also comes against a slightly more supportive inflation backdrop. Consumer price inflation slowed to 3.2% in November, its lowest level since March, and the government’s budget included measures to shift climate-related costs away from household energy bills and into general taxation, potentially easing near-term pressure on disposable incomes.

    Despite these factors, consumer spending in the UK has remained subdued. Although wages have outpaced inflation this year, households — like their counterparts across much of Europe — have continued to save at elevated rates. This reluctance to spend has puzzled economists and suggests that confidence, while improving, has yet to translate into a meaningful recovery in consumption.

    This article was written by Eamonn Sheridan at investinglive.com.

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