Expert Views on the BoE’s Monetary Policy Conundrum
Bob Elliott, Chief Investment Officer at Unlimited Funds, warned that wage growth is keeping services inflation elevated. Services inflation makes it harder for core inflation to decline:
“Continued elevated wage growth has kept services prices in the economy elevated as well, and with it core inflation above target. There was some hope that this would moderate further, but that looks increasingly less likely given the recent wage data releases.”
Elliott added that despite inflation concerns, the BoE recently cut rates. Two policymakers pushed for a 50bps move to support economic growth. Markets have priced in another 50-60bps in rate cuts for 2024.
Meanwhile, UK economic growth further complicates the BoE’s outlook. The economy expanded 0.4% month-on-month in December, up from 0.1% in November. The UK data…
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