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MNI UK CPI Preview - April 2024: The key to whether we see a June cut

  • The MNI Markets team thinks that Wednesday's CPI print will be the most important single indicator determining whether the BOE cuts rates in June or remains on hold (likely until August).
  • April CPI is particularly important for the UK as it marks the beginning of the new financial year and a number of services prices see their annual price increases.
  • Last year both the Bank of England's forecast and the analyst consensus were surprised at how high services inflation was in April 2023’s print.
  • The Bank of England looks for services CPI at 5.52%Y/Y while the analyst median expectation from the previews we have read is a bit softer at 5.47%Y/Y, down from 6.0%Y/Y in March. The Bloomberg consensus for services CPI is a little softer at 5.4%Y/Y.
  • We think if the data is broadly in line with expectations, the probability of a cut will increase (and this will also impact the probability of further cuts down the curve). With markets still pricing just under a 50/50 chance of a June first cut, we would expect to see a decent market reaction to either a higher or lower-than-expected services CPI print.
For the full MNI UK CPI Preview including summaries of sellside analysts' views see:

UK_CPI_Preview_2024_05_Release.pdf

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