UK CPI YY (Nov) 3.9% vs. Exp. 4.4% (Prev. 4.6%); All Services 6.3% (prev. 6.6%)
- The largest downward contributions to the monthly change in both CPIH and CPI annual rates came from transport, recreation and culture, and food and non-alcoholic beverages.
- The annual rate in November 2023 was the lowest since September 2021.
via ONS
Reaction details (07:07)
- In response to the soft data, GBP/USD fell from 1.2711 to 1.2653. Gilts are yet to open, however, Bund Mar'24 spiked higher from 137.54 to 137.94 before paring a bulk of the upside.
07:30GMT
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Market pricing via Reuters has seen a dovish reaction with 133bp of cuts implied across 2024 (pre-release 116bp) and the first cut seen in May (pre-release June).
Analysis details (07:15)
- Another welcome release for this at Threadneedle St. and while this will undoubtedly result in a dovish shift to market pricing at 07:30GMT, it may not move the dial for the BoE just yet which next meets in February. At which point the MPC will have access to December's inflation data and, more pertinently, additional wage-related prints via both hard releases and survey indicators. Data which have been given greater status by the December statement and remarks from the likes of Broadbent and Breeden thereafter.
- Though, the release may well be sufficient to prompt one or more of the three hawkish dissenters to move in-line with the majority in a vote for unchanged and at the other end of the spectrum could see dove-Dhingra formally vote for a rate cut.
- Pantheon's Tombs writes "The MPC can't dismiss Nov's drop in inflation as noise. Its new measure of underlying services inflation, which excludes non-private rents, accomm. prices and airfares as they are “not typically reliable indicators of trends in inflationary persistence”, fell to 6.5%, from 6.9%:"
20 Dec 2023 - 07:00- Fixed IncomeEconomic Commentary- Source: Reuters
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