Five charts to start your day

The Bank of England expects to see headline inflation fall below its 2% target

Good morning! I hope you had a well-rested weekend.

Now, this is interesting. The Bank of England expects to see headline inflation fall below its 2% target by early 2025. This comes after the Bank of England made an interest rate announcement last week. What happened? Nothing! Rates remain on hold.

On the other side of the pond, the US Federal Reserve did the same. But the story over there is different: rampant hot GDP growth, an emboldened consumer, and wage inflation that exceeds the CPI to offer greater spending power. I’ve covered this last week ad nauseam with charts, so that’s not my focus here.

Let’s talk about the UK. I’m a Brit after all, so this makes sense. That’s what this first chart is about. It’s about inflation, or the lack of it. The debate is how this will affect future monetary policy in the UK.

The Bank of England has constantly adjusted its expectations since the summer. There’s been little change. The central bank expects inflation to fall below its 2% target rate by the spring of 2025. And these expectations will have an influence on how the central bank sets interest rates in the future.

---

1. The Bank of England now sees inflation falling below 2%

Source: Eeagli

So what conclusions can we draw from this picture. Well, the Bank of England has already admitted that the UK economy may stagnate in the coming year. According to Bloomberg, “the market responded by betting the BOE would have to ease policy more aggressively in the second half of next year”.

That makes sense give where the Bank of England expects inflation to be. Furthermore, it would seem that traders agree: they have more than fully priced in two quarter-point cuts by the end of 2024.

Coming up:

2. Britain continues to export education to the world’s elite

3. Buying second-hand is becoming more popular

4. Chinese growth has slowed dramatically

5. The fastest growing economies in the world

If you would like to view these charts, why not become a paid subscriber? You would be actively supporting me and the work I do. You can even take out a free one-week trial.