The U.K.’s annual rate of inflation jumped further above the Bank of England’s target in April as businesses raised their prices in response to higher payroll taxes and increased utility charges, an expected move that will nonetheless reinforce the central bank’s caution.

In short, the Bank of England should - pretty quickly - become more relaxed about the inflation story. Admittedly the bar for a June rate cut is set pretty high. We think the next move is much more likely in August, and our expectation is that the once-per-quarter pace of cuts continues through this year and into the next.