Moneyfarm’s Post

UK inflation has fallen to 2.3%, leaving it just shy of the 2% target 📊 Explaining how this cut could impact the Bank of England’s next move in the summer is our Head of Financial Analysis, Danni Hewson: “Just like that expectation of a June rate cut has been washed away like confetti after rain-soaked summer wedding. Within minutes of the official inflation numbers hitting our screens market expectation that the MPC could shift the base rate down next month plummeted from 50/50 to just over 10%.” Read the full article in Wealth DFM: https://lnkd.in/dA4PMD2q

Inflation has dipped to 2.3% in April, down from 3.2% in March. This unexpected drop is a welcome sign. And now we finally have a General Election date... While a reduction in the Bank of England base rate was already on the horizon, the speed and depth of this potential cut may be greater than anticipated. This could lead to lower borrowing costs for businesses, freeing up capital for investment and growth. The Bank of England will be closely monitoring inflation data to determine the appropriate course of action for interest rates. While this initial drop is positive, it's important to remain cautious as the election impact and global economic factors continue to evolve. Share your thoughts! Are you feeling more optimistic about the economic outlook and its impact on farms and rural businesses?  #ruralmortgages #ruralbusiness #inflation #banking #economicoutlook  

🌍 FXGuard Market Insight 🌍 | The Bank of England’s latest rate cut and economic outlook hold crucial insights for managing financial risk in today’s volatile market. The Bank of England (BOE) reduced the benchmark interest rate by 0.25% to 4.75%, with Governor Andrew Bailey emphasizing a cautious approach to further easing due to persistent inflation risks. The BOE noted that Chancellor Rachel Reeves’ recent budget could drive inflation up by as much as 0.5%, potentially pushing CPI inflation to 2.8% by Q3 2025. The budget is also expected to boost GDP by 0.75% in its peak year. UK borrowing costs have risen sharply since the budget, evoking memories of the 2022 financial turmoil. Geopolitical developments, including Donald Trump's U.S. election win, have further increased trade-related risks and inflation uncertainty. Inflation forecasts show CPI at 1.7% currently but rising to 2.5% by year-end, with the BOE monitoring wage growth, profit margins, and potential price pressures from a tight labor market. The MPC maintains that a gradual approach to policy easing remains essential, keeping inflation risks under control and moving toward a medium-term return to the 2% inflation target. #FXGuard #MarketInsights #BankOfEngland #Inflation #InterestRates #GlobalEconomy #FXRiskManagement #EconomicOutlook #UKEconomy

Here's last week's economic and market highlights: 🌍 UK ● The Bank of England’s (BoE) Monetary Policy Committee left interest rates at a 16-year high of 5.25% for a fifth consecutive month. BoE Governor Andrew Bailey said the recent fall in inflation was “very encouraging and good news”, but noted signs of inflationary persistence, mainly from service sector inflation, which was still at 6% per year in February. ● UK inflation, as measured by the Consumer Prices Index, fell to a two-and-a-half-year low of 3.4% in February. This exceeded economist expectations that February’s headline figure would fall to 3.5%. Want the full update? Sign up here: https://lnkd.in/eb7NqAbX #MondayMarketUpdate #FinanceMarket #GlobalMarkets #EconomicNews #AssetManagement #ClientExperience #investmentcommentary #ConsumerDuty

The Consumer Price Index has slowed down from January’s 4%, falling to its lowest rate since September 2021. “The better-than-expected result provides some measure of relief for policymakers, even if the headline figure remains well above target. This easing trend suggests a potential for further declines” explains Richard Flax, our Chief Investment Officer. With the financial markets still expecting the Bank of England to cut interest rates this year, what impact will the latest UK inflation data have on its monetary policy decisions? "While speculation of a summer interest rate cut looms, the Bank of England's commitment to maintaining stability, particularly around its 2% inflation target, may keep rates unchanged in the near term. Investors should remain watchful for sustained progress in inflation moderation over the coming months” comments Flax. Let’s take a step back, what is inflation and what causes it? Read more: https://lnkd.in/e5jjfKG3  #CPI #inflation #costofliving #BoE #investments #savings #wealthmanagement #markets #moneyfarm

In line with market expectations, the Bank of England has once again opted to hold the base rate at 5.25%, the highest level since the 2008 financial crisis. ‘Headline inflation in the UK has seen a slow but steady decline since the highs of 11.1% in October 2022 to 4% now, with markets and investors at the edge of their seats for any signs of a rate cut. While the BoE has offered positive murmurings to indicate a future rate cut, there's still work to be done’ explains Richard Flax, Chief Investment Officer at Moneyfarm. “In Europe, the ECB is also playing out a similar tune, stating that pinning inflation to 2% would be the priority before talks of a rate cut”- continues Flax-  ‘European data makes it clear that the ECB is closer in the battle against inflation than the UK, and could also pre-empt the BoE in terms of cutting rates.’ As with all investing, your capital is at risk. #BoE #interestrates #inflation #monetarypolicy #economy #financialmarkets #investments #moneyfarm

As we wake up to the news from the Office of National Statistics that UK inflation fell to 1.7%, the discussions invariably turn to the next Bank of England MPC meeting on 7 November and expectations of a further rate cut. Having reviewed the previous MPC meeting notes published on 19 September, eight members of the committee voted to maintain rates at 5% with one member voting to reduce rates by 0.25%. The overriding theme that members seem to be looking for is "inflation returning sustainably to the 2% target in the medium term had dissipated" (see points 37-41 of the minutes). With this in mind are they likely to reduce rates in November or leave that decision until December? My vote would be to leave this another month for inflation to continue on its downward trajectory and thus create long term confidence in the UK market as we head into a more positive 2025. Sources/links: https://lnkd.in/eSRGuMqT https://lnkd.in/eHXhn89F

The Bank of England cut rates by 25bps! This marks the second rate cut of the year, taking the policy rate to 4.75%. The vote was 8-1 (Mann dissented), compared to a 5-4 at the August cut. Key details from the statement include: - "A gradual approach to removing policy restraint remains appropriate." - "The Budget is provisionally expected to boost CPI inflation by just under half a percentage point at its peak." ... "provisionally expected to boost the level of GDP by around 0.75ppt at their peak in a year’s time." - "There has been continued progress in disinflation," ... "although remaining domestic inflationary pressures are resolving more slowly". No change to the forward guidance, as the messaging on "gradual approach" to easing remains. Gilt yields rise, and GBP-USD has risen by c. 35pips to around 1.2935 post the BoE decision (at the time of writing). Onto Bailey's presser next! The full statement can be found here: https://lnkd.in/duJN9gD6 #macro #bankofengland #boe #pound #bailey #gbp #economy #markets #inflation #budget #monetarypolicy

The economic calendar is quite busy ahead of the first day of summer, and we have today two announcements to dig into: the Bank of England (BoE)'s and the Swiss National Bank (SNB)'s respective rate decision. 🇬🇧 Kicking it off in the UK, the BoE has decided to maintain interest rates at 5.25% in a decision described as "finely balanced." The next BoE meeting in August is expected to be critical, with the inflation forecast playing a crucial role. So this is "wait and see" - and hope for the best. Some key takeaways: 💼 Interest Rate Hold The BoE has opted to keep the rates steady at 5.25%, despite yesterday’s inflation print - which fell to the target of 2% for the first time in three years. 📉 Potential Rate Cut The decision, with a seven-to-two vote by the Monetary Policy Committee, leaves the door open for a possible rate cut in the next meeting in August. 📊 Economic Context Despite the higher services inflation, the BoE maintains that this does not significantly alter the disinflationary trajectory. 🏛️ Political Implications The decision is a setback for Prime Minister Rishi Sunak, who has taken credit for the falling inflation and suggested that his government has set the stage for rate cuts. 📈 Market Reaction Following the announcement, GBP fell 0.2% against the USD, and the yield on the interest rate-sensitive 2-year Gilt dropped to 4.13%. 👉 The BoE's stance contrasts with other central banks like the European Central Bank and the Bank of Canada, which have already started lowering rates. #Finance #Economics #BoE #MonetaryPolicy #InterestRates #UKEconomy #Inflation #MarketTrends

[Capital at risk] This morning, the Office for National Statistics has announced that prices of electricity, gas and other fuels fell by 27.1% in the year to April, the largest drop since records started in 1989. Gas prices fell by 37.5% on the year, compared with a fall of 26.5% in March, while electricity prices fell by 21%, compared with 13% in March. In other good news for consumers, food prices slowed to the lowest annual rate since November 2021. Despite #inflation inching closer to the Bank of England’s 2% target and Prime Minister Sunak’s declaration that “brighter days are ahead as inflation is back to normal”, there’s more to today’s inflation data. “Analysts had expected inflation to come in even lower, at 2.1% year on year. Services inflation was the culprit here, rising 5.9% year on year, down only marginally from the March figure. So while today’s data is encouraging at the headline level, high service inflation is likely to weigh on the minds of Bank of England rate setters and probably pushes out the date of the first rate cut” comments our Chief Investment Officer, Richard Flax. #CPI #economy #costofliving #BoE #investments #savings #Sunak #wealthmanagement #markets #moneyfarm