Why The BoE Cut Twice To YE25

Recent inflation data shouldn't change the game.

The latest June CPI inflation print for the UK came in at 3.6%, the highest level in almost 18 months. UK wage growth remains above historical norms, and fiscal uncertainty ahead of the November budget means some are flagging any shifts in monetary policy as unwise.

Despite these factors, markets are pricing in 46bps of cuts through to year-end for the Bank of England (BoE). Even though the view from the ground makes this feel a little rich, we agree with this pricing. Here’s why.