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UK Inflation Hits Year Low, But Rate-Cut Bets Face Headwinds

UK inflation declined to its lowest point in more than 12 months, sparking expectations among financial markets that the Bank of England may moderate its interest-rate hiking campaign. The decline offers temporary relief from persistent price pressures that have gripped the economy. However, economists remain cautious, warning that inflationary forces could resurface as energy costs remain volatile. Market participants have begun pricing in fewer rate increases from the central bank than previously anticipated. The International Monetary Fund has suggested the Bank of England may not need additional hikes and could even consider rate cuts depending on how inflation develops. The mixed signals reflect broader uncertainty about whether the current slowdown represents a durable trend or merely a temporary respite in the battle against inflation.