Latest news with #ElliottJordan-Doak
Yahoo
27-05-2025
- Business
- Yahoo
Odds of more Bank of England interest rate cuts fall as food inflation rises
The Bank of England's (BoE) readiness to cut interest rates further has been put into further doubt as food inflation in the UK has risen for the fourth month in a row, in yet another sign of sticky inflation. The annual rate of food price rises hit 2.8% this month, after a 2.6% rise in April, according to the latest shop price data from the British Retail Consortium (BRC). Analysts at Pantheon Macroeconomics argued that persistent inflation and a sharp rise in the minimum wage will likely keep the BoE from cutting interest rates at the current rate. The central bank's base rate currently stands at 4.25% following a 25 basis point cut earlier this month. 'The UK environment is more inflationary than before the pandemic. Only one more rate cut this year looks fair,' said Robert Wood and Elliott Jordan-Doak at Pantheon. Read more: Gold prices fall after Trump delays EU tariffs The primary inflation measure, the consumer price index (CPI), stood at 3.5% in the 12 months to April, a higher-than-expected increase from the previous month. That means price increases are moving away from the BoE's 2% target. Barclays (BARC.L) has also revised its interest rate forecasts following the higher-than-expected inflation data. The bank no longer expects the BoE to cut rates in June and now predicts the base rate will drop to 3.5 % by February 2026, rather than by the end of this year as previously forecast. Huw Pill, who voted against the BoE's decision earlier this month to lower the base rate by 25 basis points to 4.25%, has previously said that Threadneedle has been cutting rates too quickly, given the inflation outlook. 'I remain concerned about upside risks to the achievement of the inflation target," he said. Clare Lombardelli, deputy governor of the BoE, and Megan Greene, an external member of the Bank's monetary policy committee (MPC), both said that while they supported the decision to lower interest rates to 4.25%, they were reluctant to take further action without more evident signs of inflation subsiding. 'I don't think we can pull out the ticker tape and suggest it [inflation] is transitory,' Greene said. 'There is still reason to be concerned about inflation persistence.' Read more: Trending tickers: Tesla, Nvidia, GameStop, Palantir and Whitbread The uptick in grocery inflation was primarily driven by higher fresh food prices, which rose by 2.4% compared with 1.8% the previous month. In contrast, ambient food inflation cooled slightly, falling to 3.3% from 3.6% in April. 'While overall shop prices remain unchanged in May, food inflation rose for the fourth consecutive month,' said Helen Dickinson, chief executive of the BRC. 'Fresh foods were the main driver, and red meat eaters may have noticed their steak got a little more expensive as wholesale beef prices increased.' Despite the increase in food prices, overall shop prices remained 0.1% lower than a year ago—unchanged from April—reflecting continued deflation in non-food goods. Non-food prices declined by 1.5% in the year to May, deepening from the 1.4% drop seen in April. Electrical goods in particular saw faster price falls, with retailers ramping up promotions to boost sales ahead of potential disruption from US tariffs. 'Prices fell faster for electricals as retailers tried to encourage spending before any potential knock-on impact from US tariffs,' the BRC in to access your portfolio
Zawya
06-03-2025
- Business
- Zawya
Sterling extends drop versus euro after German fiscal boost
The pound extended a slide against the euro on Thursday, dropping to its weakest level since January as the single currency benefited from an improving growth outlook after Germany announced plans to massively boost fiscal spending. Sterling was last at 83.85 pence per euro, down about 0.2% on the day. It's dropped about 1.5% this week, and is on course for its biggest one-week fall since January 2023. "It's all to do with the broad-based euro optimism that we've seen with this shift in fiscal policy in Germany," said Kirstine Kundby-Nielsen, FX analyst at Danske Bank. On Tuesday, the parties looking to form the next government of Germany, Europe's largest and the world's third largest economy, agreed to loosen fiscal rules and create a 500 billion euro special fund to boost infrastructure. That sent the euro surging against major peers and pushed bond yields higher on expectations for more borrowing. Major investment banks have been quick to lift their growth forecasts for Germany and the euro zone bloc, while some now expect fewer interest rate cuts from the European Central Bank. The ECB announces policy later on Thursday and is widely expected to lower its deposit rate by 25 basis points, the sixth reduction in the easing cycle. Bank of England rate setters, meanwhile, are generally sticking to their "careful" approach to interest rate cuts, having lowered borrowing costs for the third time since August last month. Against the dollar, the pound was down 0.1%, having earlier risen to its highest in four months at $1.2924. Britain's construction sector contracted sharply last month, a survey showed on Thursday. The preliminary reading of the S&P Global/CIPS UK Construction Purchasing Managers' Index fell to 44.6 last month from January's 48.1, its weakest level since May 2020. "Rocketing uncertainty around global trade policy, rising materials prices, and the looming payrolls tax hike in April all conspired to further sap confidence," said Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics. The all-sector PMI, which combines services, manufacturing and construction, fell to a 16-month low of 50, down from 50.3 in January. (Reporting by Samuel Indyk Editing by Bernadette Baum)
Reuters
06-03-2025
- Business
- Reuters
Sterling extends drop versus euro after German fiscal boost
LONDON, March 6 (Reuters) - The pound extended a slide against the euro on Thursday, dropping to its weakest level since January as the single currency benefited from an improving growth outlook after Germany announced plans to massively boost fiscal spending. Sterling was last at 83.85 pence per euro , down about 0.2% on the day. It's dropped about 1.5% this week, and is on course for its biggest one-week fall since January 2023. "It's all to do with the broad-based euro optimism that we've seen with this shift in fiscal policy in Germany," said Kirstine Kundby-Nielsen, FX analyst at Danske Bank. On Tuesday, the parties looking to form the next government of Germany, Europe's largest and the world's third largest economy, agreed to loosen fiscal rules and create a 500 billion euro special fund to boost infrastructure. That sent the euro surging against major peers and pushed bond yields higher on expectations for more borrowing. Major investment banks have been quick to lift their growth forecasts for Germany and the euro zone bloc, while some now expect fewer interest rate cuts from the European Central Bank. The ECB announces policy later on Thursday and is widely expected to lower its deposit rate by 25 basis points, the sixth reduction in the easing cycle. Bank of England rate setters, meanwhile, are generally sticking to their "careful" approach to interest rate cuts, having lowered borrowing costs for the third time since August last month. Against the dollar, the pound was down 0.1% , having earlier risen to its highest in four months at $1.2924. Britain's construction sector contracted sharply last month, a survey showed on Thursday. The preliminary reading of the S&P Global/CIPS UK Construction Purchasing Managers' Index fell to 44.6 last month from January's 48.1, its weakest level since May 2020. "Rocketing uncertainty around global trade policy, rising materials prices, and the looming payrolls tax hike in April all conspired to further sap confidence," said Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics. The all-sector PMI, which combines services, manufacturing and construction, fell to a 16-month low of 50, down from 50.3 in January.
