Economic Analysis

The manu. PMI eased back to 54.9 in June, amid sustained gains in output, new orders and stock building. Input prices rose at a slower pace, while output price inflation accelerated Traditional industrial production fell by 3.1% in the 3 mths to May, and it was 8.7% lower YoY.

The Federal Reserve Open Market Committee (FOMC) for July saw the central bank leave its key interest rate unchanged. The target range for the Fed funds rate was maintained at 3.50-3.75%, for a fifth consecutive meeting. The July meeting outcome was in line with market expectations. Nine of the twelve voting FOMC members were in favour of the “no-change” decision with three “hawkish” dissenters (Hammack, Kashkari and Logan), preferring a 25bps rate hike. Chair Warsh stated that there was an “active, robust discussion” within the FOMC on the policy outlook.

The Bank of England's Monetary Policy Committee (MPC) meeting for July saw the central bank leave the Bank Rate unchanged at 3.75%, as expected. This represents the fifth successive meeting where the central bank has been on hold.

Economic picture has been robust in the face of geopolitical shocks.

De-escalation of Middle East War has driven relief rally for markets. 

US economy continues to outperform, with Eurozone and UK dented by higher energy prices and political uncertainty.

The July meeting of the ECB's Governing Council saw the central bank leave its key interest rates unchanged. The deposit and refi rates were maintained at 2.25% and 2.40%, respectively. This was very much in line with market expectations. The decision to remian on hold was unanimous.

The global economy started 2026 on a strong footing. Indeed, US tariffs have not escalated to the extent expected post ‘Liberation Day’ in April 2025, and some measures were struck out, at least temporarily, by the US Supreme Court in early 2026. A key driver of this resilience has been the surge in AI-related investment, particularly in the US. 

Foreign Currency and Interest Rates from 2025

The Irish residential property market remains defined by tight supply as 2025 draws to a close. However, over the course of the year, there have been some encouraging signs in the suppy dynamics, albeit the outlook remains challenging. 

This Budget is set against an uncertain economic backdrop so far this year. GDP growth was robust in the early part of the year but has since moderated. The Chancellor had committed to not raising taxes materially further following last year’s hikes to national insurance (NI) on employer contributions, which among other measures raised £40bn. While the tax rises are largely to fill the hole in the fiscal rules, there are also net spending increases in the budget