Above Forecasts: The UK’s annual inflation rate hit 3.8% in July, slightly above the 3.7% expected by economists and up from 3.6% in June. Core inflation also rose to 3.8%, signaling persistent price pressures.
Bank of England’s Delicate Dance: Earlier this month, the BoE narrowly voted (5–4) to cut interest rates from 4.25% to 4%, resuming its “gradual and careful” easing strategy. The latest inflation data complicates that path.
Mixed Economic Signals: Despite sticky inflation, the UK economy showed a surprise 0.3% GDP growth in Q2. However, the jobs market remains tepid, adding to the BoE’s policy dilemma.
Outlook & Projections: The BoE expects inflation to peak at 3.8% in September before easing in early 2026. Deutsche Bank forecasts CPI to fall to 2.75% by mid-2026, but warns the road to the 2% target is narrowing.
(source tradingview.com)
—Agencies
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