"Markets see a 77% chance of a May rate cut to 4.5%, but a 3.2%+ inflation print could derail it"

I'm expecting a slight uptick in inflation, given the fallout from Trump's tariffs, which has likely hindered supply chains and will likely lead to price rises. If inflation rises only slightly, I think Threadneedle Street will cut rates, but too a big a rise in inflation could see them postpone a cut until later in the year. Given that the Bank has been cautious in lowering the base rate over the past year or so, it's unlikely they'll abandon this now. However, with the ongoing psychodrama across the pond unlikely to stop anytime soon, all options are on the table, and that could mean a cut even if inflation rises more than anticipated.

I expect inflation to rise to 3.2% tomorrow, up from 2.8%, due to the Budget’s cost pass-through, Trump’s tariffs (125% on China) and a weaker pound ($1.27). Energy and import costs are key drivers, despite airfare dips. The Bank of England faces a tightrope: inflation control versus economic stagnation. Markets see a 77% chance of a May rate cut to 4.5%, but a 3.2%+ infation print could derail it. Threadneedle Stree held rates at 3.0% inflation in January, wary of sticky core (3.7%) and wage growth (5.9%). If inflation rises, the Bank of England shouldn’t cut; the Budget and trade war are inflationary, risking a spiral, and its 2% target must hold. Current economic growth doesn’t justify cuts, with inflation eying 3.7% by third quarter. Markets will continue to wobble in these extraordinary times.