Commenting ahead of tomorrow’s ONS CPI figures, Chris Arcari, Head of Capital Markets, Hymans Robertson, said:

“UK headline CPI inflation is expected to have declined to 3.1% year-on-year in March. Indeed, falling energy prices and the impact of the UK’s energy price cap means headline CPI inflation is expected to fall below target in the coming months, but sticky services and wage inflation still highlight elevated underlying price pressures.

“We expect CPI inflation to continue to fall back this year, but with services inflation slowing less sharply and wage growth remaining relatively high, there remains uncertainty over how quickly inflation will reach target on a sustainable basis. ​

“Amid signs of persistence in underlying inflation, markets are now expecting around two 0.25% pa rate cuts from the BoE in 2024, down from - albeit very optimistic - expectations of between six and seven cuts at the start of the year.

“With inflation still expected to slow, we continue to expect the major central banks to cut rates this year. However, given the massive overshoot of inflation, we expect central banks to tread cautiously, and the emphasis to be on bringing policy rates down slowly to less restrictive levels.”