Summary
We review April’s UK CPI data, and its implications for BoE policy going forward. Overall the print was strong, with core further accelerating year-on-year as base effects pushed headline lower. The internals of the report were also discouraging for the MPC, with indicators of inflation breadth re-widening and ongoing elevated contributions from some demand-sensitive sectors. We adjust our subjective BoE probabilities to incorporate a higher terminal rate and a more protracted hiking cycle, as well as reflecting non-base-case but plausible scenarios around re-acceleration.
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