(Bloomberg) — Money markets eased wagers on the scope for further Bank of England rate hikes, ahead of US figures that are forecast to show inflation slowed further in December.
(Bloomberg) — Money markets eased wagers on the scope for further Bank of England rate hikes, ahead of US figures that are forecast to show inflation slowed further in December.
Traders are now betting on less than one-percentage-point of increases for the remainder of this hiking cycle, which would leave the bank rate peaking below 4.5% by the middle of the year. That’s the lowest since Nov. 10, the day US data showed price growth slowing more than expected, and a long way from the 6.25% top expected in the tumultuous days following then-UK Prime Minister Liz Truss’s unfunded tax cuts in September.
“It looks sufficient and potentially too much given the macro outlook which is pretty dire,” said Charles Diebel, head of fixed income at Mediolanum International Funds in Dublin. “But they need to contain expectations, and that’s the message they really need people to get.”
Policymakers said the nation’s inflation rate may have already peaked when they raised the policy rate by a half-point in December. Since then, Huw Pill signaled price pressures may be easing as the labor market weakens and the economy heads into recession.
The US Bureau of Labor Statistics is set to publish the December inflation numbers at 1:30 p.m. London time. Prices are forecast to slow for a sixth consecutive month to 6.5% year-on-year, according to Bloomberg’s median poll of analysts.
(Updates throughout)
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