Prior +2.6%Core CPI +3.8% vs +3.6% y/y expectedPrior +3.4%Services CPI +5.4% vs +4.8% y/y expectedPrior +4.7%
Big upside surprise for UK inflation. The market will certainly reprice the rate cut expectations to something like 25-28 bps of easing by year-end (one rate cut) and even then I’m skeptical the BoE will be able to cut again in 2025.
This is the risk I’ve been talking about in the last few weeks. It’s not growth, it’s inflation now. And that will likely be the same for the ECB and the Fed.
This article was written by Giuseppe Dellamotta at www.forexlive.com.