Weaker data on the strength of the UK’s economic recovery, combined with an unanticipated fall in CPI inflation from 4.4% to 4% in March, has made markets much less confident that the Monetary Policy Committee (MPC) will raise interest rates over the next few months. Overnight index swap (OIS) markets now expect the first rate hike to come in October this year. Only just over a month ago, they were pricing in a hike as soon as May. And while gilt yields have risen over the last month or so, they have increased by less than in the US and in the core euro-zone economies.
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