Last week saw economists divided over the timing of the anticipated interest rate cuts by the Bank of England (“BOE”). A Reuters poll revealed a division between forecasts for a June cut and a delay until the third quarter. Despite inflation easing to 3.2% year-on-year in March, slightly above the expected 3.1%, persistent service prices and wage growth may delay the BOE’s monetary easing. The International Monetary Fund’s recent downward revision of the UK's growth outlook further...

As inflation dynamics diverge between the UK and the US, the Bank of England (“BOE”) is poised for potential interest rate cuts ahead of the Federal Reserve. Bloomberg reports that the momentum of lowering inflation in the UK, with further easing expected, bolsters the case for a summer rate cut. Despite warnings from BOE Monetary Policy Committee members Jonathan Haskel, Catherine Mann and Megan Greene about the likelihood of rate cuts, market dynamics suggest a shift in monetary policy...

The former Chair of the US Federal Reserve, Ben Bernanke, has offered a candid assessment of the Bank of England's ("BOE") forecasting processes, highlighting shortcomings such as outdated modelling software and staff carrying out manual functions which could be automated. While providing recommendations for improvement, Bernanke stopped short of advocating major departures from the BOE's traditional approach to monetary policy, leaving such reforms for future consideration. As discussions...

Amidst evolving economic indicators and shifting market sentiments, the Bank of England's (“BOE”) latest Decision Maker Panel survey indicates a moderation in both inflation and wage forecasts. The survey highlights a decline in year-ahead own price inflation to 4.1% in the three months to March, down from 4.3% in February, suggesting a slight easing in price pressures. Similarly, one-year ahead Consumer Price Index (“CPI”) declined to 3.2% from 3.3%, while three-year ahead CPI stood at 2.7%...

Amidst recent economic data demonstrating a challenging landscape, the UK economy finds itself navigating through uncertain waters. Official figures released by Reuters last week confirmed that the UK economy slipped into a shallow recession last year, with gross domestic product ("GDP") contracting by 0.1% in the second quarter last year and 0.3% in the final quarter of 2023. Although unchanged from preliminary estimates, these numbers underscore the fragile state of the economy. The weak...

The Bank of England (“BOE”) last week announced its decision to maintain the benchmark interest rate at 5.25%, signalling a cautious approach amidst evolving economic conditions. However, recent developments in the UK's economic landscape have sparked speculation about potential shifts in monetary policy. With headline inflation easing to 3.4% in February, slightly below the BOE's forecast, attention turns to the central bank's stance on interest rate cuts.  Stocks featured: Next, Judges...

As the financial world braces for the Bank of England's (“BOE”) meeting on 21st March, analysts are closely scrutinising signals of potential policy shifts. Despite nearing the 2% inflation target, the consensus among experts, as indicated by Reuters polling, suggests that the BOE is likely to maintain a status quo on interest rates for the time being. However, a dovish tilt is emerging, with expectations leaning towards a cautious approach to rate adjustments. This sentiment reflects the...

UK Chancellor Jeremy Hunt unveiled a 2% reduction in the main rate of National Insurance contributions in the Spring Budget, in line with expectations. These adjustments were supported by upgraded forecasts from the Office for Budget Responsibility, with revised gross domestic product projections of 0.8% in 2024 and 1.9% in 2025. However, an article from Bloomberg noted concerns as fiscal headroom dropped to £8.9 billion from £13 billion in the November forecast, the second lowest level on...

Bank of England (“BOE”) Deputy Governor, Sir Dave Ramsden asserted this week that inflation pressures in the UK remain too high, emphasising the need for more evidence of easing before contemplating a cut in interest rates. Additionally, Ramsden suggested the possibility of the BOE selling all UK government bonds purchased under Quantitative Easing (“QE”) to be more prepared for future crises. The move aims to safeguard public finances, as the Treasury underwrites losses incurred on these...

Dale Bartleson of YO1 Radio in York sits down and chats with Alan Kinnaird of Walker Crips Investment Management. 📞 Get in touch To find out more about the full range of services Walker Crips Investment Management has to offer please click here to request a call back from Alan Kinnaird, Chartered FCSI, or another member of the team based in our York office. To find out more about YO1 Radio, please click here. Capital at risk. Professional advice should be sought before engaging in investment...

Recent statements from Bank of England ("BOE") officials indicate a reluctance to ease their inflation-fighting stance, despite confirming a technical recession late last year. Chief economist, Huw Pill, emphasised the need for several more months of data before being convinced that inflation would fall and remain at the BOE’s 2% target. Monetary Policy Committee members, Megan Greene and Catherine Mann, acknowledged some easing in wage pressures but highlighted the ongoing tightness in the...

UK inflation data released last week provided a surprise as headline inflation remained steady at 4% year-on-year, defying expectations for a slight increase. The core Consumer Price Index ("CPI") was also below forecast at 5.1%. Monthly CPI figures declined 0.6%, contrasting with the anticipated 0.3% drop. Despite services inflation persisting at 6.5%, slightly below projections, economists are optimistic, forecasting a dip in inflation to 3.4% in February and a return below the Bank of...

In a week of diverse developments, the Bank of England ("BOE") conveyed a nuanced stance on interest rates. Deputy Chief Breeden's speech on Wednesday suggested waning concerns about the necessity of future rate hikes as inflationary pressures ease. This sentiment resonated with the BOE's recent policy statement, indicating a potential review of the duration at current rate levels. Despite acknowledging receding inflation pressures, Breeden remained cautiously optimistic, emphasising the need...

Last week the Bank of England (“BOE”) voted to keep interest rates steady at 5.25%. The decision represented a rare divergence of opinion with the Monetary Policy Committee split three ways, for the first time since the 2008 financial crisis. Two committee members advocated for a 0.25% interest rate hike, another voted for a 0.25% interest rate cut, while the remaining six members opted for the status quo. The BOE affirmed the need for a restrictive monetary policy to address inflationary...

Last week, Bloomberg published an article detailing that the Bank of England (“BOE”) should revise its inflation tightening bias or risk undermining the credibility of its own policy. Despite unchanged guidance since August, inflation has eased faster than expected, wage growth has softened and the economy has slowed. A delicate balancing act lies ahead for the BOE as it navigates through the Spring Budget and an impending general election later this year. With new economic forecasts expected...

Last week, UK inflation figures surprised on the upside, with the headline Consumer Price Index showing 4%, surpassing the consensus estimate of 3.8%. Core inflation also exceeded expectations at 5.1%, deviating from the forecasted 4.9%. Despite the increase, economists caution against overinterpreting this data, as inflation is projected to reach the Bank of England's (“BOE”) 2% target by the spring. Nevertheless, this data counters market complacency, suggesting the BOE might delay the...

According to the latest figures announced by the Office of National Statistics last week, the UK economy grew by 0.3% in November 2023, surpassing the expected 0.2% expansion by economists polled recently by Reuters, after contracting by 0.3% in the previous month. The services sector, buoyed by robust performances in retail, car leasing and computer games, played a pivotal role in this recovery. Strong Black Friday sales and a reduction in industrial action also contributed, alongside...

The first week of the new year unveiled a mixed outlook for the UK economy as surveys of economists published in the Financial Times and The Times portrayed a consensus on sluggish growth in 2024, teetering on the edge of a technical recession. Analysts anticipate gross domestic product growth between 0% and 1%, with a looming general election adding a layer of uncertainty. The Bank of England (“BOE”), while expected to cut interest rates, is likely to tread cautiously as the battle against...

Last week saw the Bank of England ("BOE") stand firm on its key rate, leaving interest rates unchanged at 5.25% and dismissing talks of imminent rate cuts, a day after the Federal Reserve signalled its intention to cut rates in 2024. BOE Governor Andrew Bailey emphasised the ongoing fight against inflation, challenging investors who had increasingly bet on rate cuts. Despite BOE warnings, traders remained unfazed, forecasting interest rates of 4% by the end of the next year, as reported by...

The UK economy shows promising signs of stabilising following the recent economic slowdown induced by soaring inflation and successive interest rate hikes. At the Bank of England’s (“BoE”) upcoming monetary policy committee meeting this week, the committee is expected to keep interest rates on hold as wage growth remains relatively high and inflation levels remain elevated. The British Chamber of Commerce highlighted that the UK economy will continue growing until the end of 2025, albeit at...

Bank of England (“BoE”) Governor Andrew Bailey and Deputy Governor Dave Ramsden last week underscored the challenges ahead in taming inflation. Bailey, in an interview with The Chronicle, acknowledged the difficulty of the next stage in the fight against inflation. While welcoming recent data, Bailey was sceptical that the 2% target will be achieved any time soon, predicting inflation to stand at around 4% by the end of the first quarter of 2024. Deputy Governor Ramsden, interviewed on...

As per a City A.M. poll last week, economists project Bank of England (“BoE”) interest rate cuts between May and August next year, contrasting with market expectations of a move from March. BoE policymakers remain cautious about high wage growth and persistent inflation concerns and view the ongoing Gaza conflict as a significant risk to inflation targets. The potential for an earlier rate cut hinges on economic slowing, influenced by the impact of prior rate tightening.... Stocks...

Last week saw the UK October inflation figures witness a significant drop, with the headline Consumer Price Index (“CPI”) standing at 4.6% year-on-year, below the consensus expectations of 4.8% and a substantial decrease from the prior month's 6.7%. Core inflation also moderated to 5.7% versus a consensus estimate of 5.8% and September’s 6.1% reading. The breakdown from the Office for National Statistics (“ONS”) attributed this decline primarily to housing and household services, where the...

Last week, Bloomberg Economics conducted an analysis revealing that the latest forecasts are indicative of turbulent times ahead for the UK economy, with key indicators suggesting that the country may already be in the midst of a recession. After a period of aggressive monetary tightening and rising unemployment, households are becoming more cautious about spending, posing a significant challenge for Prime Minister Rishi Sunak, who faces an upcoming election. The Autumn Budget statement on 22...