We think UK core inflation will ease to 2% by the end of 2024 as the effects of the rises in interest rates are felt. But the UK’s more persistent labour supply shortfall than elsewhere suggests this disinflationary process is likely to take longer in the UK than in the US and the euro-zone. That’s why we think the Bank of England will be the last of the major central banks to halt hiking and one of the last to cut rates.
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