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04.22.2026

NOISE OF RUMORS

In the US, the near‑term outlook remains resilient, anchored by solid domestic demand. Looking ahead, although the Iran conflict is creating a more challenging outlook, we believe the strength of the US economy in weathering the energy shock is ample. Higher energy prices are lifting headline inflation, but core inflation continues to normalise, with limited risk of second‑round effects. In the EA, despite a relatively solid starting point growth-wise, the Iran conflict is worsening the short-term outlook, with geopolitical tensions weighing on high-frequency indicators. Incoming data point to a loss of momentum, prompting downgrades to our H1-2026 EA GDP growth forecasts. While a temporary ceasefire has driven a sharp correction in energy prices, risks remain skewed by negotiation outcomes. Inflation dynamics are dominated by energy, while core inflation continues to ease, limiting second-round risks. In China, Q1 GDP and March activity data were mixed amid the global energy shock, and the breakdown suggests China's economy remains bifurcated; manufacturing and exports remain strong, while housing activity and consumer spending continue to lag. Despite the Q1 outturn, we do not make adjustments to our real GDP growth profile for the remainder of 2026. On inflation, reflecting higher energy prices, we lift to the upside our 2026 headline CPI forecast (annual average) to 1.0% y/y (from 0.9% prior baseline). We expect the Fed to remain on hold at the April meeting as economic data remain solid, inflation is rising, but the path of deceleration for core inflation remains unchanged and geopolitical instability in the Middle East presents risks to both sides of the Fed’s mandates. Beyond April, we stick to our baseline of three rate cuts, with risks tilted towards two in 2026, as we believe disinflation progress will be more pronounced than what most Fed’ members have in mind. We expect the ECB to remain on hold at the April meeting, and we stick to our call of one rate cut in Q4 2026/Q1 2027, as we think that downside risks to growth are more prominent compared to upside risks to inflation. At the Q1 Monetary Policy Committee (MPC) meeting, the PBOC reiterated a measured easing stance, signaling a preference for calibrated and targeted easing. We see oil shocks as less of a constraint on modest policy easing, given the continued weakness in domestic demand.​​


FABIO FOIS
Head of Investment Research & Advisory

MATTEO GALLONE
Junior Macroeconomist

CHIARA CREMONESI 
Senior Rates Strategist

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