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Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world
Today we got data on inflation, showing that it stayed at 3.8% in September, news that was greeted with a supernova of positive cheer that exploded through markets. Traders still see a cut next month as unlikely, but are now putting a 70% likelihood of one before Christmas. Gilt yields went down to their lowest level since August 2024 – i.e. basically since this government came to power – and swap rates, used to price fixed-rate mortgages, fell to the lowest rate in more than three years.
Just as inflation is staying steady, the government has moved to a clearer inflation-busting narrative. The Treasury is allowing speculation to run that the Budget will scrap VAT on household power to bring down electricity bills, thereby shaving a bit off inflation too. Cutting energy bills in this way will help the government hit the other election pledge to cut £300 from energy bills.
Allegra Stratton: What’s Realistic on Bank of England Rate Cuts?
