Walker Crips' Market Commentary

Recent updates indicate an optimistic shift in the UK economy. KPMG has revised its gross domestic product growth forecast for 2024 from 0.3% to 0.5% and projects 0.9% growth for 2025. This is supported by anticipated Bank of England (“BoE”) rate cuts, potentially reducing the bank rate to 3% next year. This economic boost is further aided by political certainty due to expected fiscal policy chang...

Last week, the UK's economic landscape presented a nuanced view. The Office for National Statistics revised first quarter gross domestic product ("GDP") growth up to 0.7%. Growth was driven by robust expansions in services and production, despite the construction sector experiencing a decline. Despite a 0.7% positive uptick in real household disposable income, April's GDP showed no growth for the...

UK inflation continued to ease in May, with the headline rate at 2.0% year-on-year, down from 2.3% in the 12 months to April, marking the lowest rate since July 2021. Core inflation was 3.5%, while services prices remained high at 5.7%. The largest downward pressure came from food prices, while motor fuels and transport costs drove inflation up. The Bank of England (“BOE”) held interest rates at 5...

UK unemployment grew and wage growth stabilised last week after UK labour market data presented a mixed economic outlook. The May unemployment claimant count increased by 50,400, increasing the unemployment rate to 4.4%. Payrolled workers dropped by 3,000, and vacancies declined by 12,000 to 904,000. Despite these signs of a cooling job market, average weekly earnings remained strong at 5.9%, part...

UK inflation expectations continue to ease with the Citi/YouGov inflation tracker for May showing a decline to 3.1%, ahead of expectations and the lowest since July 2021. The Bank of England’s ("BOE") Decision Maker Panel survey indicated steady short-term inflation expectations but noted a potential stall in the disinflationary process. Encouragingly, wage growth expectations fell, which could re...

The Bank of England's ("BOE") outgoing Deputy Governor, Ben Broadbent, defended the bank’s policy-making process against accusations of groupthink, highlighting robust discussions at meetings. While acknowledging progress on inflation, Broadbent hinted at possible rate cuts ahead of the BOE's next meeting in the coming months. Meanwhile, there has been positive news on the consumer front; the Brit...

UK inflation eased sharply in April to 2.3% year-on-year, surpassing market consensus and Bank of England (“BOE”) forecasts of 2.1%, marking the lowest rate since summer 2021. While gas and electricity prices declined, motor fuel prices increased, slightly offsetting the downward pressure. However, core inflation remained sticky, recording a 3.9% figure against a consensus of 3.6%. The key service...

There is a continued expectation that the Bank of England ("BOE") will be cautious in lowering interest rates, unlike during past rate-cutting cycles. Bloomberg and Reuters reported concerns about inflation reaccelerating if rates are lowered too quickly due to past downturns such as those in 1998, 2001 and 2008. Markets are currently pricing in the first interest rate cut in August of 0.25%, foll...

Last week, the Bank of England ("BOE") decided to maintain interest rates at 5.25%. However, two out of nine officials from the Monetary Policy Committee ("MPC") voted in favour of an interest rate cut, demonstrating a more dovish view and increasing market expectations for a rate cut in June. This shift was predominantly driven by macroeconomic forecasts indicating inflation heading back towards...

In anticipation of the Federal Reserve’s (“Fed”) upcoming policy decision, the FTSE 100 and gilt yields saw modest increases. This decision is expected to influence the Bank of England's (“BOE”) interest rate strategy. Currently, UK markets have dialled back interest rate expectations, predicting only 0.38% in cuts this year, with the first adjustment anticipated in the fourth quarter. This cautio...

Last week saw economists divided over the timing of the anticipated interest rate cuts by the Bank of England (“BOE”). A Reuters poll revealed a division between forecasts for a June cut and a delay until the third quarter. Despite inflation easing to 3.2% year-on-year in March, slightly above the expected 3.1%, persistent service prices and wage growth may delay the BOE’s monetary easing. The Int...

As inflation dynamics diverge between the UK and the US, the Bank of England (“BOE”) is poised for potential interest rate cuts ahead of the Federal Reserve. Bloomberg reports that the momentum of lowering inflation in the UK, with further easing expected, bolsters the case for a summer rate cut. Despite warnings from BOE Monetary Policy Committee members Jonathan Haskel, Catherine Mann and Megan...

The former Chair of the US Federal Reserve, Ben Bernanke, has offered a candid assessment of the Bank of England's ("BOE") forecasting processes, highlighting shortcomings such as outdated modelling software and staff carrying out manual functions which could be automated. While providing recommendations for improvement, Bernanke stopped short of advocating major departures from the BOE's traditio...

Amidst evolving economic indicators and shifting market sentiments, the Bank of England's (“BOE”) latest Decision Maker Panel survey indicates a moderation in both inflation and wage forecasts. The survey highlights a decline in year-ahead own price inflation to 4.1% in the three months to March, down from 4.3% in February, suggesting a slight easing in price pressures. Similarly, one-year ahead C...

Amidst recent economic data demonstrating a challenging landscape, the UK economy finds itself navigating through uncertain waters. Official figures released by Reuters last week confirmed that the UK economy slipped into a shallow recession last year, with gross domestic product ("GDP") contracting by 0.1% in the second quarter last year and 0.3% in the final quarter of 2023. Although unchanged f...

The Bank of England (“BOE”) last week announced its decision to maintain the benchmark interest rate at 5.25%, signalling a cautious approach amidst evolving economic conditions. However, recent developments in the UK's economic landscape have sparked speculation about potential shifts in monetary policy. With headline inflation easing to 3.4% in February, slightly below the BOE's forecast, attent...

As the financial world braces for the Bank of England's (“BOE”) meeting on 21st March, analysts are closely scrutinising signals of potential policy shifts. Despite nearing the 2% inflation target, the consensus among experts, as indicated by Reuters polling, suggests that the BOE is likely to maintain a status quo on interest rates for the time being. However, a dovish tilt is emerging, with expe...

UK Chancellor Jeremy Hunt unveiled a 2% reduction in the main rate of National Insurance contributions in the Spring Budget, in line with expectations. These adjustments were supported by upgraded forecasts from the Office for Budget Responsibility, with revised gross domestic product projections of 0.8% in 2024 and 1.9% in 2025. However, an article from Bloomberg noted concerns as fiscal headroom...

Bank of England (“BOE”) Deputy Governor, Sir Dave Ramsden asserted this week that inflation pressures in the UK remain too high, emphasising the need for more evidence of easing before contemplating a cut in interest rates. Additionally, Ramsden suggested the possibility of the BOE selling all UK government bonds purchased under Quantitative Easing (“QE”) to be more prepared for future crises. The...

Dale Bartleson of YO1 Radio in York sits down and chats with Alan Kinnaird of Walker Crips Investment Management. 📞 Get in touch To find out more about the full range of services Walker Crips Investment Management has to offer please click here to request a call back from Alan Kinnaird, Chartered FCSI, or another member of the team based in our York office. To find out more about YO1 Radio, pleas...

Recent statements from Bank of England ("BOE") officials indicate a reluctance to ease their inflation-fighting stance, despite confirming a technical recession late last year. Chief economist, Huw Pill, emphasised the need for several more months of data before being convinced that inflation would fall and remain at the BOE’s 2% target. Monetary Policy Committee members, Megan Greene and Catherin...

UK inflation data released last week provided a surprise as headline inflation remained steady at 4% year-on-year, defying expectations for a slight increase. The core Consumer Price Index ("CPI") was also below forecast at 5.1%. Monthly CPI figures declined 0.6%, contrasting with the anticipated 0.3% drop. Despite services inflation persisting at 6.5%, slightly below projections, economists are o...

In a week of diverse developments, the Bank of England ("BOE") conveyed a nuanced stance on interest rates. Deputy Chief Breeden's speech on Wednesday suggested waning concerns about the necessity of future rate hikes as inflationary pressures ease. This sentiment resonated with the BOE's recent policy statement, indicating a potential review of the duration at current rate levels. Despite acknowl...

Last week the Bank of England (“BOE”) voted to keep interest rates steady at 5.25%. The decision represented a rare divergence of opinion with the Monetary Policy Committee split three ways, for the first time since the 2008 financial crisis. Two committee members advocated for a 0.25% interest rate hike, another voted for a 0.25% interest rate cut, while the remaining six members opted for the st...

Last week, Bloomberg published an article detailing that the Bank of England (“BOE”) should revise its inflation tightening bias or risk undermining the credibility of its own policy. Despite unchanged guidance since August, inflation has eased faster than expected, wage growth has softened and the economy has slowed. A delicate balancing act lies ahead for the BOE as it navigates through the Spri...