The Week Ahead - 5 – 9 May 2025

US & UK – We expect the Fed to keep policy on hold, and the Bank of England to lower its policy rate by 25bp to 4.25%. Both decisions would be in line with market pricing and consensus expectations. For the Fed, downside growth risks are likely to be outweighed by upside inflation risks from tariffs. For the BoE, the MPC continues to gradually reduce monetary policy restriction, but stubbornly high wage growth and underlying inflationary pressures are likely to keep rate cuts at a quarterly pace.

China – Following weaker PMIs last week (see here), the escalation of the trade war with the US will likely show an impact on more macro data the coming week. Annual export growth (Friday) is expected to slow sharply, while the annual contraction of imports is expected to deepen. Caixin’s services PMI (Tuesday) is expected to drop moderately.