Falling inflation at odds with ‘higher for longer’

The ‘higher for longer’ narrative on interest rates that is baked into market pricing is at odds with evidence of widespread falls in inflation. Higher oil prices mean that fuel inflation will be a bit higher than seemed likely a few months ago. But the bigger point is that this upward impact will be comfortably offset by falls in food and core inflation, allowing central banks to cut by more than is generally expected by end-2025.