DAVY VIEW

UK consumer price inflation (CPI) grew 2% year-on-year (yoy) in June. Services inflation has been in focus ahead of the Bank of England’s next monetary policy meeting on August 1st. This remained unchanged at 5.7% yoy and did not decelerate as the Bank of England expected. Economic growth is also tracking above forecasts for Q2, and wage growth for job postings remains high at 7% yoy. Nonetheless, given recent dovish comments by UK rate setters, a cut of 25 basis points looks likely in September.