The recent problems of the US government sponsored enterprises, Fannie Mae and Freddie Mac, have contributed to an apparent shift in the markets’ attention away from the upward pressure on inflation and towards the increasingly bleak outlook for activity. Indeed, global bond yields and global equity prices have fallen sharply. And in the UK, for the first time in two months, the markets have started to discount the possibility that the MPC will cut interest rates some time within the next 12 months. Our forecast that the MPC will cut rates sharply once the inflation threat fades suggests that bond yields and market interest rate expectations have further to fall.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services