Morgan Stanley Revises BoE Rate Cut Timeline Amid Rising Inflation

Morgan Stanley has revised its British interest rate cut prediction to March, suggesting a 25-basis-point reduction, backed by unexpected increases in December inflation. It anticipates further cuts in July and November, altering its former forecast for April and June. British inflation hits 3.4%, surpassing expectations.

Morgan Stanley has altered its forecast for the Bank of England's interest rate cuts, now expecting a reduction in March instead of February. This shift came after December's inflation data showed a rise, reaching 3.4%, surpassing expectations of a 3.3% increase.

The bank plans subsequent 25-basis-point cuts in July and November, replacing its previously projected cuts slated for April and June. UBS Global Research has also adjusted its rate cut anticipation to March following recent inflation data.

Despite sluggish economic growth, Britain's inflation remains the highest among major developed economies. However, inflation is predicted to decelerate in the forthcoming months as last year's increases in utility costs and government tariffs are excluded from annual figures. The BoE's upcoming monetary policy meeting on February 5 is expected to maintain rates at 3.75%.

(With inputs from agencies.)