Without the “Magnificent 7”, the S&P 500 would have only gained 4.1% in 2023 and 6.3% in 2024 on a price return basis. The index’s actual price returns were 24.2% and 23.3%, respectively.
Here’s what I think we should expect from today’s @BankOfEngland policy meeting:
No immediate interest rate cut,
Openness to initiate a modest interest rate cutting cycle in future MPC meetings, most likely starting on 1st August and possibly on 20th June,
Somewhat more relaxed about how much inflation will head back up after falling to a 2%’ish level this quarter,
Downplaying the risks of getting a little ahead of the US Federal Reserve in terms of rate cuts, and
A 7-2 or 6-3 split in the voting on the announcement.
Should this materialize, and given what is currently reflected in market pricing, it would translate into somewhat lower mortgage rates for households and loan rates for businesses.
What this should also do, though the politics is complicated, is shift the policy focus to the need for additional government measures to boost productivity and growth.
#economy #centralbanks #econtwitter