Inflation prints continued to decline over the quarter following the trend of the previous quarter. The YoY RPI rate at the end of March was 4.3%, while the CPI rate was 3.2%. Over the quarter the market lowered its expectation for the number of Bank of England base rate cuts in 2024. This is due to the receding probability of rates being cut by the US Federal reserve. However, we anticipate that UK rate cuts are still likely this year as inflation returns closer to target.
Over the quarter, the nominal gilt yield curve shifted lower, falling by approximately 15 basis points (bps) at the short end and around 5bps at the long end.
Over the quarter, the nominal gilt curve has shifted up by around 50 basis points (0.50%) on average across all maturities.
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Over the quarter, the nominal gilt curve has shifted down by around 25 basis points across the medium to longer maturities.