UK Inflation Data Favour BoE Rate Hold, Second-Round Risks Contained

Rabobank's Senior Macro Strategist Bas van Geffen points out that UK inflation has matched expectations at 3.1% year-over-year, with energy and fuel prices driving the rise.

The core Consumer Price Index (CPI) and services CPI remained unchanged, which, combined with labour market slack and muted selling price expectations, suggests that second-round effects are contained.

This data clearly supports a hold on Bank Rate at 3.75% by the Bank of England (BoE) in its upcoming meeting, as the rate is already around 50 basis points above economists' estimates of the UK's neutral rate.