Global equity markets failed to sustain the gains they made following the news that US CPI inflation fell below 5% for the first time since April 2021 and ended the week slightly lower due to recession worries.
In the US, initial jobless claims jumped to 264,000 (i.e. those making an ‘initial’ claim for unemployment insurance), which is the largest number since the last week in October 2021 – and clearly explains why the Fed was so eager to pause their interest rate increases.
In the UK, the BoE yesterday (11 May 2023), increased interest rates by a further 0.25% to 4.5% – and although this increase was expected, the guidance wasn’t!
In fact, BoE policymakers never fail to amaze us: despite the fact they still believe inflation will be materially below their mandated 2% target within two years, they said that they would continue to increase UK interest rates, and in the same breath they upgraded their February forecasts for economic growth by a massive amount (2.25% by mid-2026).