Lower UK inflation can turn out to be helpful to UK economy and FTSE100 as it may allow a softer monetary policy to proceed
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This week was always going to be about inflation and the consequences of the monetary policy. Inflation in the US was as expected but still caused plenty of volatility and concern about the Federal Reserve’s reaction. In response to the latest US Consumer Price Index, investors were mainly experiencing a decline in US stocks and a stronger US Dollar. The US Dollar increased to 103.60 and has increased by 0.36% during this morning’s Asian Session.
The UK’s yearly CPI was expected to decline from 10.5% to 10.3%
However, the main shock came from this morning’s UK inflation rate. The UK’s yearly CPI was expected to decline from 10.5% to 10.3%. The yearly CPI figure declines modestly to 10.1%, the lowest since October 2022. The news is positive for the UK economy and FTSE100 as it may allow a softer monetary policy to proceed. The announcement was specifically positive for the economy as they may decline experienced amongst food products, transportation, and fuel.
On the other hand, the Pound has come down tumbling as the weaker inflation rate may trigger a halt in interest rate hikes. The Bank of England, over the past 6 months, has been the most dovish central bank out of the main 3 global regulators. Out of the board’s 9 members, 3 have voted to stop hikes at the past 2 meetings.
