HSBC Asset Management Anticipates Gradual Rate Cuts, Sees 2% Inflation Floor

HSBC Asset Management Focuses on Gradual Rate Cuts, Sees 2% Inflation Floor

HSBC Asset Management is not primarily concerned with when the Bank of England will make its first interest rate cut, but rather the pace and extent of the subsequent cuts. According to Hussain Mehdi, Director of Investment Strategy, the big question for HSBC is how quickly and far rates will fall after the first cut.

In a global economy characterized by fragmentation, supply-side instability, and fiscal activism, HSBC AM believes that 2% is the floor for inflation, rather than the ceiling. This suggests a gradual easing cycle for the Bank of England, with rates eventually settling higher than pre-COVID levels.

Recently, the Bank of England left the bank rate unchanged at 5.25%, signaling that any adjustments will be slow and measured.