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Cutting season

The UK printed its latest CPI report today, showing a 2% YoY increase in consumer prices, right in line with the Bank of England target. When it comes to central banks mandates, an unwritten rule considers 2% prices stability, and that’s why there is a fixation with that number. After ECB’s rate cut two weeks ago, the Bank of England could cut its official rates tomorrow, although consensus expects no cuts for this meeting, even if the data supports it, and unemployment in the UK keeps deteriorating. It seems, however, that the heads of major central banks are feeling more comfortable with inflation and that means the cutting season may have started. The Bank of Canada and the Central Bank of Brazil have cut in June and Banxico and the Swiss National bank both made cuts in March this year. Will the Fed be next?


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