As Dinah Washington used to sing, what a difference a day makes, although its relevance to central bank meetings and stock markets was probably the last thing on the great jazz musician's mind.

While there was no change in official UK interest rates at the latest Bank of England MPC (Monetary Policy Committee) meeting, there was plenty of chatter around governor Andrew Bailey's distinction between the outlook for UK and US inflation, leading some commentators to speculate on a rate cut as soon as next month rather than in September.

UK headline inflation fell to 3.2% in March, below the US for the first time since peaking in 2022, and the bank now sees inflation falling to 1.9% in two years’ time, below its official target, which as EY chief UK economist Peter Arnold says ‘is an indication the MPC thinks current market pricing is too high and rates are likely to be cut more significantly’.

Rate cuts are happening in Europe – specifically in Sweden and Switzerland – and the European Central Bank is widely expected to lower rates next month.

Yet, less than 24 hours later, UK first-quarter GDP came in ‘roaring ahead of expectations’, as Morningstar’s European strategist Michael Field put it, at 0.6% against a consensus forecast of 0.3%, with manufacturing and services both in growth territory, suggesting a June rate cut is anything but a forgone conclusion.

Attention switches back to the US economy this week with the release of core consumer and producer prices as well as industrial production, retail sales and housing starts, all of which will feed into the Federal Reserve’s data bank and inform its thinking on when it might move to cut interest rates.

Next week brings the focus back to the UK again with news on house prices, consumer and industrial prices, including the all-important core reading which strips out food and energy, and trends in industrial orders.

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