Bond giant Pimco is betting on a fall in UK inflation that will, in turn, allow the Bank of England to cut interest rates further than traders currently expect, arguing that there is “nothing that special” about the price pressures affecting the country.The manager of $2tn in assets has an overweight position relative to the benchmark index in five-year gilts, which stand to benefit from more aggressive BoE rate cuts.“We don’t think the UK economy will prove to be a massive outlier [on inflation],” Andrew Balls, Pimco’s chief investment officer for global fixed income, told the Financial Times yesterday.Britain is on track for the highest rate of inflation among the G7 this year, according to the OECD. The Paris-based organisation said this week that consumer prices would rise 3.5 per cent in 2025, up from 2.5 per cent last year, and would remain well above the BoE’s 2 per cent target in 2026.
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