{"id":8906,"date":"2024-07-17T09:30:50","date_gmt":"2024-07-17T08:30:50","guid":{"rendered":"https:\/\/hamiltoncourtfx.com\/?p=8906"},"modified":"2024-07-17T09:30:54","modified_gmt":"2024-07-17T08:30:54","slug":"uk-inflation-holds-firm","status":"publish","type":"post","link":"https:\/\/hamiltoncourtfx.com\/es\/uk-inflation-holds-firm\/","title":{"rendered":"UK Inflation Holds Firm"},"content":{"rendered":"
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Word of the Week Wednesday<\/strong><\/h5>\n
Ceremonial Search: <\/strong>According to the House of Commons Library “The State Opening of Parliament starts with a ceremonial search of the cellars in the Houses of Parliament. This commemorates Guy Fawkes’ \u2018gunpowder plot’ of 1605. The ceremony begins in the Prince\u2019s Chamber in the House of Lords. The search is conducted by the Yeomen of the Guard, the King\u2019s Bodyguard.”<\/h5>\n
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UK Inflation Holds Firm<\/h2>\n <\/div>\n
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Figures released this morning indicate that UK inflation held firm throughout June, with headline CPI at 2%.<\/p>\n

This broadly came in line with market expectations and follows May\u2019s print which marked the first time that inflation had fallen back in line with the Bank of England\u2019s target since July 2021.<\/p>\n

On a monthly basis prices rose 0.1% between May and June, marking a considerable slowdown from the previous month\u2019s figures. Here, increases in the price of petrol (which rose 3 pence per little) and transport were offset by clothing and footwear.<\/p>\n

This came as food price inflation also fell to its lowest level since October 2021, a far cry from the recent high of 19.1% recorded in March 2023.<\/p>\n

When excluding the volatile components of food and energy, core inflation also met market expectations, coming in at 3.5%. Much like last month, given that this is 1.5 percentage points above CPI, the print indicates how services inflation will continue to cause a headache for policy makers given how \u2018sticky\u2019 it is proving.<\/p>\n

Service inflation also remained considerably high at 5.7%, unchanged from May, though 10bps higher than expectation.<\/p>\n

With inflation holding firm, money markets are pricing in around a 36% chance of an August cut during yesterday\u2019s session, and 78% chance of a cut by September.<\/p>\n

Attention now turns to the BoE\u2019s monetary policy committee meeting on 1 August.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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ECB<\/h2>\n <\/div>\n
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Sticking with monetary policy, tomorrow all eyes will be on Frankfurt as markets look towards the ECB\u2019s interest rate decision and subsequent commentary for forward guidance.<\/p>\n

With their main refinancing rate at 4.25%, and their marginal lending facility and deposit facility at 4.5% and 3.75%, respectively, the ECB is widely expected to hold tomorrow. This comes as markets price in around an 85% chance of the next 25bps cut by September.<\/p>\n

In June, the ECB met market expectations in conducting their rate cut since 2016. This follows nine consecutive months of rates being held at their highest level since the currency union\u2019s inception, in a move which was indicative of how Frankfurt saw their fight against inflation as entering a new stage.<\/p>\n

The ECB continue to tread a precarious tightrope in relation to monetary policy. On the one hand, with unemployment close to record lows, wage growth continues to remain relatively high at 5%, as does service price inflation at 4%. On the other hand, growth continues to be a major cause for concern for Doves, who point to a 0.1% contraction in GDP over Q4 and marginal expansion of just 0.3% over Q1 2024.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

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IMF: Upwardly Revise UK Growth<\/h2>\n <\/div>\n
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Yesterday, the International Monetary Fund upwardly revised their growth forecast for the UK economy, forecasting growth of 0.7% this year and 1.5% over 2025.<\/p>\n

With the IMF forecasting 1.3% growth for Germany and France next year, economists at the Washington, D.C based organisation expect UK growth to outpace all other major European economies.<\/p>\n

UK economic growth is not however expected to outpace that of the US or Canada, with expansions of 1.8 and 2.4% forecasted in the North American economies, respectively.<\/p>\n

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IMF on Global Growth: \u201cA Waxing and Waning Outlook\u201d<\/h2>\n <\/div>\n
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Looking more generally at global growth, the IMF kept forecasts unchanged for output over 2024 and 2025. Here, the fund expects global growth this year to be 3.2%, before rising marginally to 3.3% next year.<\/p>\n

Economist said that \u201cvaried momentum in activity at the turn of the year has somewhat narrowed the output divergence across economies as cyclical factors wane and activity becomes better aligned with its potential\u201d.<\/p>\n

Nevertheless, they outlined that \u201cServices price inflation is holding up progress on disinflation, which is complicating monetary policy normalization\u201d.<\/p>\n

Attention now turns to the string of central bank meetings, with one eye being firmly kept on the global geopolitical environment\u2026as well as recent developments in the US election.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"

Word of the week Wednesday, inflation holds firm for the UK, tomorrow’s ECB interest rate decision, UK growth forecast upwardly revised, and forecasts unchanged for global growth.<\/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-8906","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\/8906","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=8906"}],"version-history":[{"count":9,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/8906\/revisions"}],"predecessor-version":[{"id":8915,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/8906\/revisions\/8915"}],"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=8906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/categories?post=8906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/tags?post=8906"},{"taxonomy":"rp-language","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/rp-language?post=8906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}