Posted 12/13/2023, 2:51:00 PM
UK Faces Surprise Economic Slump, Spurring Expectations of Steep BoE Rate Cuts
- New data shows unexpected economic downturn in UK, strengthening expectations for 100 basis points of interest rate cuts by BoE in 2024
- Money markets now pricing in full 1% of cuts next year as economic activity slows across key sectors
- Monthly GDP fell 0.3% in October and construction output dropped 0.5%, suggesting BoE's tight policy is choking economy
- Inflation and wage growth still too high for BoE comfort, but cuts could come if core inflation drops nearer 4%
- Analysts expect BoE rate cuts starting around June 2024 to be sharper than Fed or ECB cuts, with total 200 basis points of cuts likely through 2025