Weekly Market Commentary - 26 May 2023

This week more doubt has been cast on the widely held view that central banks are about to bring an end to interest rate hikes. The decline in the UK’s headline rate of inflation was not as big as expected as food, housing and services continue to rise, leaving the Bank of England’s recent upward revision to its inflation forecast in doubt. The rise in core inflation increases the chance that rates in the UK will continue to rise in the very short term. The tone from the US central bank’s most recent interest rate meeting also leaves the door to further rate hikes wide open.

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