Market insights

UK Inflation 2% - MI190624

Breakfast this morning saw the UK release its inflation report for May.

As expected the annualised growth came in at 2%.

Whilst this is the target figure for the Bank of England, it's now a case of balance.

If the inflation number continues to drop the UK runs the risk of going into deflation. This is where things start costing less than a year previously. Sounds good for the consumer, but isn't seen as a healthy sign for the economy.

Therefore it's now down to the Bank of England to make it's decision on the interest rate decision tomorrow.

Cutting the rate theoretically helps cushion the falling inflation rate, however cutting the rate prematurely could lead to inflation running back up again. Decisions decisions.

Outside of that it's all about the Southern hemisphere with New Zealand GDP numbers and the Peoples Bank of Chinas interest rate decision in the early hours of tomorrow.

Business news naturally looks at the inflation rate and almost mirror images the above information provided above.

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Economic calendar

NZ: 23:45 GDP Data

CHN: Thursday 02:15 PBoC Interest Rate Decision

As ever we look forward to keeping you in the loop and look out for our next update.

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