The UK economy has shown growth for two consecutive months, with a 0.1% increase in February following an upward revision of January’s figure from 0.2% to 0.3%. While this is a positive sign, there are still concerns about inflation and potential interest rate cuts by the Bank of England (BoE). Despite expectations that inflation will reach the BoE’s target of 2% later this year, there is uncertainty around how this will impact interest rates.
Traders have reduced their bets on rate cuts in light of recent US inflation data, but some economists still predict up to four cuts. The BoE itself is reevaluating its forecasting model, recognizing the need for more accuracy in decision-making. On a personal level, UK workers are experiencing a boost in wages that outpaces inflation. This means more disposable income for indulging in luxuries or saving for the future. Additionally, a cut in National Insurance tax this month and falling mortgage rates due to rate cut predictions provide further financial relief. This could lead to increased activity in the housing market as individuals look to take advantage of favorable conditions.
