DAVY VIEW

After last week’s comments from Jay Powell arguing against the possibility that the Fed could soon cut rates, this week’s focus will be on April’s US CPI inflation figures. Core inflation may fall slightly to 5.5%, but hawkish voices will point to the robust pace of services inflation and pay growth. Markets are almost fully pricing in a 25bp rate hike from the Bank of England (BoE) to 4.5% this week. Hence, the focus of Governor Andrew Bailey’s press conference may also be on whether rates will stay higher for longer to curb inflation.