Some economists say a widely monitored private sector survey is an indication that UK inflation could fall notably further by year-end, leading the Bank of England (BoE) to "pause" its interest rate cycle soon, but the broader implication is that the BoE may already 'overtightened' and could need to consider cutting borrowing costs in the near future.
The fall in markets' expectations for a higher Bank of England base interest rates has reduced the likely peak for mortgage rates by about 70 basis points, according to a new analysis.
Economists say although the prospect of a second consecutive 50 basis point rate hike in August has greatly receded following softer-than-expected June inflation figures, an elevated services inflation gives the Bank of England cause to hike on at least two more occasions.
Goldman Sachs has lowered the odds the U.S. will fall into recession saying the disinflation process can continue without the need for a more material economic slowdown.
Relief for UK consumers and the Bank of England alike as it is reported grocery price inflation has seen its steepest decline since inflation peaked in March this year, falling 1.6 percentage points to 14.9% in the four weeks to 9 July 2023.
Some economists are forecasting UK economic growth to pick up through the remainder of 2023, although others warn of a recession taking hold as higher interest rates begin to bite.
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