Larger-than-expected dip raises expectations that multiple rate cuts will begin this summer.
20 March 2024
Consumer inflation in the UK continues its slow descent towards the 2% base camp, recording a slightly larger-than-expected fall to 3.4% in February from the 4.0% level in January. Coupled with goods inflation slowing we also saw producer price input inflation falling more than expected, declining 0.4% over the month, and this should help translate into additional inflation-slowing effects in the months ahead. This disinflationary tailwind will encourage market expectations of rate cuts coming this summer and market forecasts expect three 0.25% cuts for the year in total. This is probably the best a government pushing for an autumn election could hope for.
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The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is not an indicator for the current or future development.