While regular private sector wage growth in February and services CPI inflation in March were both a bit higher than the Bank of England had expected, we still think that the flatlining of the economy over the past two years will dampen price pressures enough to result in CPI inflation falling below the 2% target in April and below 1% later this year. That may mean interest rates are first cut from 5.25% in June, if not in August, and fall to 3.00% next year, rather than to 4.00% as investors currently expect.
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