Previous Trading Days Events 12 Dec 2023

The Labor market report for the U.K. was released yesterday showing that the British wage growth slowed by the most in almost two years and the Claimant Count Change was reported less than expected but higher than the previous figure. Labour market cooling is what the MPC wants to see at the moment.

But given that annual pay growth is still running at more than twice the pace that would be consistent with the Bank of Englands 2 inflation target, the MPC is likely to stick with its highforlonger message for a little while yet.

The Bank of England BoE raised interest rates 14 times in a row between December 2021 and August 2023. It has since kept rates on hold.

Other central banks are also keeping a close eye on inflation pressures in their tight job markets.

Source httpswww.reuters.comworldukukregularwagesgrowby733monthsoct20231212

The November Consumer Price Index CPI rose 3.1 on an annual basis, in line with the estimated figure. Core inflation, excluding volatile items such as food and energy costs, also matched expectations, showing a 4 annual rise.

Expectations for a cut of at least 25 basis points in March fell to 43.7, from about 50 before the data, according to the CME Groups FedWatch Tool. The market is now pricing in a chance of about 78 for a cut in May, up from about 75 on Monday.

The market is certainly assuming that inflation is going to keep coming down, that earnings in this next year are going to…