The likelihood of inflation becoming embedded in the UK economy now appears minimal and it could even undershoot the MPC's 2pc target over the medium term, according to Schroders' David Scammell.
Scammell, head of UK interest rate strategies, pointed out that while bond investors' worries have this year mostly focused on stagflation, these fears now seem misplaced. "In addition to poor macro data, the crude oil price has fallen roughly 50pc from the highs of July and there is still no evidence of any inflation-wage spiral, nor is there any indication that companies feel in a position to pass on costs," he said. "The worsening in the growth outlook suggests that unemployment is going to rise by even more than previously thought - further restricting the ability of employees to ...
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