UK lifts rate cut hopes in 2024 on softer March inflation, US steps behind after Powell signals delay
UK's March inflation print underscored market uncertainty about when BoE policymakers led by Governor Andrew Bailey will be able to ease off on the highest interest rates in 16 years. However, UK inflation is still higher than the BoE's two per cent but the direction of the downtrend is clear, said analysts. While UK has lifted rate cut hopes.
a surprise jump in price pressures in the US last week has prompted Federal Reserve Chair Jerome Powell to warn that interest rates in the world's largest economy may stay higher for some time. Core inflation, which excludes energy, food, alcohol and tobacco, fell to 4.2 per cent last month from 4.5 per cent, which was also was stronger that economists had expected. Meanwhile, inflation in the services sector — watched by the BoE for indications of domestically driven price pressures — eased to six per cent from 6.1 per cent.
The BOE and economists had expected a drop at 5.8 per cent. Traders in the UK significantly pared bets on interest-rate cuts from the BoE, moving to favor just one quarter-point reduction this year. Sterling hit a fresh one-month high against the euro and rose versus a weakening dollar after the UK inflation data released earlier today.
Also Read: US inflation beats Wall Street estimates, rises 0.4% in March; Fed's June rate cut hopes fade away The pound gained as much as 0.4 per cent to $1.2479, reversing earlier losses after the data and snapping three days of declines. The yield on two-year gilts, among the most sensitive to policy, rose as much as six basis points to 4.53 per cent, the highest since February. UK consumer price index-based inflation hit a high above 11 per cent at the end of 2022 in the wake of Russia’s invasion of Ukraine, which led to
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