It has been a very busy few weeks. The UK has a new government, intent on ‘growing the economy’. President Biden announced he was suspending his 2024 re-election campaign in the wake of mounting pressure from within the Democratic Party after a series of gaffes had seriously damaged his credibility. Perhaps the only real surprise was his intention to run in the first place. In addition, Donald Trump survived an assassination attempt and claimed he took a bullet ‘for democracy’.
Meanwhile, back in the real world, Federal Reserve Chair Powell, said the central bank would not wait for 2% inflation before cutting rates. Markets are now pricing in several rate cuts, the first starting in September. In the UK, service sector price inflation remains stubbornly high at close to 6%. Bank of England chief economist, Huw Pill, has already expressed his concern about this and its potential to derail rate cuts. If new Chancellor, Rachel Reeves, really is going to award 5½% salary increases across the public sector, he could well be on to something,
