{"id":7881,"date":"2024-05-22T10:04:27","date_gmt":"2024-05-22T09:04:27","guid":{"rendered":"https:\/\/test-hcfx.pantheonsite.io\/?p=7881"},"modified":"2024-05-22T10:04:27","modified_gmt":"2024-05-22T09:04:27","slug":"uk-inflation-surpasses-expectations","status":"publish","type":"post","link":"https:\/\/hamiltoncourtfx.com\/es\/uk-inflation-surpasses-expectations\/","title":{"rendered":"UK Inflation Surpasses Expectations"},"content":{"rendered":"
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Word of the Week Wednesday<\/strong><\/h5>\n
Drachma: The Drachma is thought to be one of the worlds oldest coins and derives from the ancient Greek term \u201cto grasp\u201d. It\u2019s believed that the Drachma\u2019s value was derived from the value of a handful of arrows, or rather how many arrows could be grasped in a hand.<\/h5>\n<\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n\n
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UK Inflation Surpasses Expectations<\/h2>\n <\/div>\n
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This morning, UK inflation came in hotter-than-expected in the latest signal that the Bank of England may be forced to maintain monetary conditions higher for longer.<\/p>\n

Accordingly, money markets have downwardly revised their rate cut expectations form the BoE\u2019s next monetary policy committee on 20 June. For example, during yesterday\u2019s session money markets were implying that there was around a 50% chance of a rate cut in June, however this has now fallen to below a 15% chance. Looking further ahead, markets are pricing in two rate cuts by February.<\/p>\n

Figures from the ONS showed the country\u2019s consumer price index falling from 3.2% in February to 2.3% in March, against a market consensus which was forecasting inflation to fall more extensively to 2.1%. Furthermore, on a monthly basis prices rose 0.3% between March and April, against forecasts of a 0.2% print.<\/p>\n

Here, the ONS said that \u201cFalling gas and electricity prices resulted in the largest downward contributions to the monthly change in both CPIH and CPI annual rates, while the largest, partially offsetting, upward contribution came from motor fuels, with prices rising this year but falling a year ago.\u201d<\/p>\n

When excluding the volatile components of food and energy, core inflation similarly beat expectations of 3.6% with the index coming in at 3.9%, marking a more muted 30bps slowdown from last months figure. This again indicates how services inflation will continue to cause a headache for policy makers given how \u2018sticky\u2019 it is proving.<\/p>\n

Hence, while today\u2019s headline inflation figures marked the lowest since July 2021, the fact that it still remains above the Bank of England\u2019s 2% target rate signals that Threadneedle Street continue to face inflationary headwinds.<\/p>\n

Attention now turns to the Bank of England\u2019s next monetary policy meeting on 20\u00a0June.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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Reaction from No.10<\/h2>\n <\/div>\n
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While much of this morning\u2019s reaction has centred on the monetary policy implications of inflation being higher than expected, Sunak has said that \u201cToday marks a major moment for the economy, with inflation back to normal. This is proof that the plan is working and that the difficult decisions we have taken are paying off.\u201d<\/p>\n

Hence, while Sunak claims that \u201ceverything is heading in the right direction\u201d, no doubt members of the MPC may well be thinking differently.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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RBNZ Hold Rates for a Seventh Consecutive Time<\/h2>\n <\/div>\n
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This morning the Reserve Bank of New Zealand kept its benchmark rate unchanged at 5.5%, meeting market expectations. This marked the seventh consecutive hold as inflation continues to remain well above the central banks 1-3% target, having only subsided to 4% over the first quarter of 2024.<\/p>\n

Here, the summary record of the meeting identified that \u201cMembers of the Committee agreed that monetary policy needs to remain restrictive to ensure inflation returns to target within the forecast timeframe.\u201d<\/p>\n

It also noted that \u201cHigher long-term wholesale interest rates globally have supported wholesale interest rates in New Zealand\u201d. This of course is indicative of how major central banks often look to adjust monetary policy in step with others.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"

Word of the week Wednesday, expectations surpassed by UK inflation, Rishi announces today’s inflation rate release as a “major moment for the economy”, and benchmark rate unchanged by Reserve Bank of New Zealand.<\/p>","protected":false},"author":15,"featured_media":2985,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"rp-language":[16],"class_list":["post-7881","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-morning-updates","rp-language-en_gb"],"_links":{"self":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/7881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/comments?post=7881"}],"version-history":[{"count":3,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/7881\/revisions"}],"predecessor-version":[{"id":7884,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/7881\/revisions\/7884"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/media\/2985"}],"wp:attachment":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/media?parent=7881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/categories?post=7881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/tags?post=7881"},{"taxonomy":"rp-language","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/rp-language?post=7881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}