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Peak does not mean pivot

There are two key points to remember as we near the end of the hiking phase of the interest rate cycle and get close to the holding phase. First, a peak in interest rates does not mean that a pivot to interest rate cuts is just around the corner. We think interest rates will be at their peak for about a year and won’t be cut until late in 2024. Second, the Bank of England’s new “sufficiently restrictive for sufficiently long” guidance will always be trumped by economic conditions. As such, economists like us can’t switch to autopilot.

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