Worldwide Financial Planning

Leading the case for higher for longer rates is Neel Kashkari, president of the Minneapolis Federal Reserve bank, who warned that several months of sustained disinflation are needed before the US Fed is able to cut. The European Central Bank signalled that a June rate cut is very much on the cards. However, rising inflation has also returned to the Eurozone and this added to the gloomy outlook.

Some journalists in certain ‘newspapers’ (which were a perfectly good functioning tree) love a headline. Others love facts. I find the drama unnecessarily upsetting for SJP customers and wholly inaccurate.

Meanwhile, stickier inflation makes it harder for the Bank of England to cut rates in the very short term and higher government borrowing has wiped out any chance of further tax cuts to sweeten the electorate.

LET’S look at how they compare. I’ll have to be broad with the comparison by looking at house prices across the whole of the UK. I’ll compare average rents, repairs, mortgages and see how the numbers work out.

In monthly terms, CPI was 0.3% (consensus: 0.1%), compared to 0.6% in March. Similarly, core CPI inflation (ex-energy, food, alcohol and tobacco) came in at 3.9% (consensus: 3.6%) vs 4.2% in March.

After three months of CPI creeping up, the small decline allowed traders to breathe a little easier, allowed the recent rally in government bonds to continue and added to the equity rally that only a few weeks ago appeared to be running out of steam. Potentially more significant is the slight slowdown in US consumer spending.