Rolling coverage of the latest economic and financial news, including September’s UK inflation report at 7am
- UK inflation expected to fall to 6.5% in September
- UK regular pay rises faster than inflation, easing pressure on living costs
While we await the latest UK inflation report (due in 10 minutes), there is encouraging economic news from China this morning.
China’s gross domestic product grew 4.9% year on year in the third quarter, beating market expectations.
China’s economic recovery showed mild momentum in the third quarter, posting a 1.3% growth from the previous three months.
This growth suggests a modest improvement in the Chinese economy. However, there are ongoing calls for increased policy support to maintain consistent growth, as there are concerns about the sustainability of the recovery.
Within the detail, the main focus will be services inflation, which surprisingly fell from 7.4% to 6.8% in the August report, and is one of the key factors the BoE is monitoring for evidence it has tightened enough (along with earnings growth and labour market tightness).
Rate expectations slipped slightly after yesterday’s slightly softer earnings data with SONIA forwards pricing in around 12bp of further tightening spread over the next three MPC meetings.
