Expected price growth among corporates has slipped further to 4.2%, down from a high of almost 7% in mid-2022.
The issue for the BoE is that wage growth is proving stickier. Expected wage growth over the next year has stabilised above 5%, and realised is still up at 7%. Both have been oughly stable for the best part of nine months now.
But for the time being, wage growth is still too high for the BoE’s liking. We also think services inflation will remain sticky around 6% for the next two to three months, before falling more noticeably by the summer.
Markets are pricing the first rate cut from the Bank of England in May, which feels a bit early. We also think when rate cuts do begin – potentially in August – they will be a little more gradual than markets are currently pricing. We expect 100 basis points of cuts this year. - ING
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