Inflation in the UK slightly eased from 3.4% to 3.2% in March, but it's still higher than expected. The core inflation rate, which excludes energy and food, was 4.2%, higher than the 4.1% forecast. This has led many investors to believe that inflation will take longer to fall than expected, and that the first interest rate cut by the Bank of England may happen later than June, as previously anticipated.
The UK economy grew slightly in February, ending a technical recession. While the GDP is still below its pre-pandemic levels, it shows signs of recovery, with construction output falling but production and services sectors growing. However, inflation remains high, and forecasts for interest rate cuts have been revised due to unexpected price increases in the US. The Bank of England is expected to cut rates four times this year, starting in June.
Headline inflation dropped to 3.4% in February, the lowest since September 2021. The Bank of England is projected to hold interest rates steady at 5.25%, despite expectations for a cut in June. The labor market has shown signs of improvement, with wage growth slowing and unemployment rising. The Bank of England remains cautious and will monitor data on services inflation and wage growth before potentially reducing rates later this year.
