February may be too soon, but rate cuts to keep on coming
Unless next week’s labour market and inflation data are unanimously weak, February may be too soon for another interest rate cut given the Bank of England’s hawkish tilt at its December meeting. But with CPI inflation set to fall further than the Bank expects, we still think that rates will fall from 3.75% now to 3.00% this year, rather than to the low of 3.25-3.50% currently priced into the market.
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