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MNI UK Inflation and Labour Market Insight: April 2024 Release

  • We think that this week’s labour market and inflation data point to both wages and inflation slightly above the BOE’s forecasts from its February MPR report and combined with activity data holding up relatively well at present, we think that the probability of a later first rate cut has increased.
  • The MNI Markets team now looks for around a 10% probability of a first cut in May (down from 15% post-March MPC), have also reduced our expectation of a first cut in June to 30% (down from 35%), have maintained our 40% probability view of an August first cut but see a 20% probability (up from 10%) of the first cut being delayed beyond August. We discuss this view in more detail.
  • To achieve the BOE's February MPR forecast for private sector regular wage growth 5.7%Y/Y in the 3-months to March looks like we will need to see a slowdown in next month's wage numbers to not come in 0.1-0.2ppt above forecast (although this forecast will be updated in the interim in the May MPR). This appears to be a bigger surprise to the consensus than to us.
  • Six analysts have changed their BOE calls following this week’s data with none of the analysts looking for a first cut in May anymore. Analysts are split between June and August for the first cut with a growing consensus around Bank Rate ending 2024 at 4.50% and 3.25-3.50% end-2025.
  • We also summarise sell-side reviews of the inflation and labour market releases in more detail.
For the full PDF see:

MNI UK Inflation Labour Insight -April 2024 Release.pdf



Inflation InsightHomepageEmployment InsightMarkets
Inflation InsightHomepageEmployment InsightMarkets

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