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2025-12-17 17:25:03
[Weak UK Inflation Data Boosts FTSE 100, Breaking Out of Consolidation] ⑴ The FTSE 100 broke out of its recent consolidation pattern after unexpectedly weak UK inflation data, as traders increased their bets on a Bank of England rate cut. ⑵ UK Consumer Price Index (CPI) data was weaker than expected across the board; traders are now betting on two more rate cuts in 2026. ⑶ The Bank of England is expected to cut rates by 25 basis points tomorrow and may release more dovish signals. ⑷ Weak inflation data propelled the UK FTSE 100 index higher as expectations of a rate cut boosted the stock market. ⑸ The UK Office for National Statistics indicated that food and non-alcoholic beverages, as well as alcohol and tobacco, made the largest downward contribution to the monthly CPI and the annualized CPI including housing costs. ⑹ Although food prices are typically volatile, several Bank of England members have recently expressed concern that persistently rising food prices could keep inflation stubbornly above 2% as it alters household inflation expectations. (7) Therefore, this is good news for the Bank of England, which will make its monetary policy decision tomorrow; the market expects it to cut the benchmark interest rate to 3.75%. (8) Given the weak UK employment and inflation data this week, the Bank of England may not only implement an interest rate cut but also convey a more dovish tone. (9) The market had previously anticipated at least one more interest rate cut in 2026, and traders are now betting on at least two more rate cuts next year.
