Research Briefing | Jan 21, 2022

Downside risks for UK from Omicron appear to be fading

United Kingdom | Downside risks 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.
Back to Resource Hub

Related Research

Seoul, South Korea

Post

BoK’s monetary policy to tighten even as hiking cycle ends

Even without rate hikes, central banks' monetary policies can effectively tighten if the nominal neutral rate falls below the policy rate. We expect this will be the case for the Bank of Korea this year, as the gap between the policy rate and the nominal neutral rate widens.

Find Out More

Post

China: Emerging green shoots in Spring, but not out of the woods

We now incorporate a faster recovery from the post-Covid exit wave and raise our 2023 full-year GDP growth forecast to 4.5% (from 4.2% previously).

Find Out More

Post

The IMF’s half-full-glass outlook is too rose-tinted

The IMF's calendar-year forecast for global GDP growth in 2023 to slow only marginally amounts to an assessment that the global economy will enjoy a soft landing.

Find Out More