The reassessment of the policy outlook has pushed Treasury yields sharply higher, with the 10-year yield reaching around 5.3% as markets price in resilient growth: the rise in nominal yields has been almost entirely matched by higher real yields.

We have revised our 2026 growth forecast upward to 1.4% (from 1.2% before); we anticipate that the gradual recovery of domestic demand will sustain the pace of expansion. Following a weak 2025, formal employment is beginning to improve. We expect core inflation to resume its downward trend in the second quarter of the year.