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Global Macro Comment — The lay of "The Land"

What do we really know about inflation? The state of the art was recently laid out by top academics and central bank economists at the "Inflation: Drivers & Dynamics" conference, held at the Federal Reserve Bank of Cleveland. In this comment we give a first-hand account of what was discussed in "The Land". The conference gave greater insight into the anchoring of inflation expectations at central banks' targets, mixed with a new understanding of inflation fundamentals. Change is often hard work, but policymakers would be smart to embrace these latest insights.

Johan Löf, Senior Economist | jolo22@handelsbanken.se

UK Comment — BoE to leave policy unchanged at its June meeting

  1. The majority of MPC members will probably want to wait and see
  2. Data have been mixed
  3. Market will watch for signals regarding August; we do not expect a rate hike until November

Kari Due-Andresen, Chief Economist Norway | kadu01@handelsbanken.no

UK Comment — UK retail sales grew strongly in May

  1. Retail sales up 1.3 percent in May on the heels of strong growth in April
  2. Some of the strength in May was due to one-off effects
  3. Underlying consumption growth has strengthened, but not as much as May numbers could suggest

Kari Due-Andresen, Chief Economist Norway | kadu01@handelsbanken.no

UK Comment — Labour market numbers broadly as expected

  1. Unemployment rate unchanged at 4.2 percent; regular pay growth down to 2.8 percent; total pay growth stays flat
  2. Year-on-year wage growth appears to have peaked and should decelerate further as base effect dissipates
  3. So far, numbers are fairly in line with the Bank of England's estimates

Kari Due-Andresen, Chief Economist Norway | kadu01@handelsbanken.no

UK Comment — UK manufacturing production falls the most since Oct 2012

  1. Industrial production down 0.8% and manufacturing down 1.4% in April
  2. Widespread weakness throughout the manufacturing sector
  3. Sentiment suggests some short-term improvement but indicates weak longer-term trend

Kari Due-Andresen, Chief Economist Norway | kadu01@handelsbanken.no

UK Comment — Services PMI stronger than expected in May

  1. Services sentiment pulled up by current business activity
  2. Growth in new business in the services sector remains weak
  3. PMIs indicate modest rebound in GDP growth in Q2

Kari Due-Andresen, Chief Economist Norway | kadu01@handelsbanken.no