The bigger-than-expected fall in CPI inflation in February was the second in as many months, and together with the Bank of England’s clearer hints that it is getting close to cutting interest rates, it gives us a bit more confidence in our forecast that the first rate cut will come in June. What’s more, we think a fall in CPI inflation to just 0.5% later this year will prompt the Bank to cut rates to 3.00% next year, rather than to 3.75% as expected by investors.
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