March 21, 2024

Chart of the Week – Don’t Stop Believin’

By Nathan Sweeney

Welcome to the Chart of the Week.


The Chart of the Week highlights that UK inflation continues to fall. UK year-on-year inflation fell to 3.4% in February 2024 (vs. 3.5% expected), decreasing from the 4% recorded in January and marking the lowest inflation rate since September 2021. Core inflation, which excludes volatile items such as energy, food, alcohol & tobacco, eased to 4.5% year-on-year (vs. 4.6% expected), marking the lowest reading since January 2022.

Clients are concerned about inflation, as inflation is still above the Bank of England’s target of 2%. So, will last-mile inflation prevent central banks from cutting interest rates this year?

No, we don’t believe it will, and here is why:

In short, inflation today is now lower than the prevailing interest rates. For me, the simple math is that even if inflation settles in at 3% (3 is the new 2), and the economy doesn’t deteriorate, then the interest rate should be at least 1% above inflation, which would see interest rates at 4%. So, you should expect interest-rate cuts this year, as interest rates are currently 5.25%.

Additionally, in February, the Bank of England predicted that inflation would drop to its 2% target in the second quarter of the year, thanks to falling energy costs, and today’s figures leave it on track to reach that level as soon as April. Remember, central banks have said they don’t need inflation to be 2% before they cut interest rates. We haven’t stopped believing that major central banks around the globe will begin cutting interest rates in June of this year.

Speaking of which, the US Federal Reserve had its meeting today, and the chart below highlights where they believe interest rates will be by year-end. Given they are responsible for lowering and raising interest rates, it’s important to keep an eye on this chart.

The chart above is called the Dot Plot.

How to Read the Dot Plot:

  • Each dot corresponds to an individual Fed member’s (the team in charge of setting interest rates in the US) view on interest rates.
  • The plot is updated quarterly, typically in March, June, September, and December.
  • The dots indicate where Fed members expect the interest rates to be at the end of the current year, as well as two or three years ahead.

Basically, we expect to see three interest-rate cuts in 2024.


Takeaway: Don’t fight the Fed!

Did you know: Saudi Arabia’s government plans to create a fund of about $40 billion to invest in artificial intelligence? Click here.

Marlborough Podcast:  This week, we discuss US inflation data, the Bank of Japan & green shoots in China. Click here.



Source: Marlborough Multi-Asset Investment Team, FT, Jurrien Trimmer, Bloomberg, Reuters.

Important Information: This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Clever to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. You should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with your own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice.

All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Clever Adviser Technology Ltd (Clever), a company registered in England and Wales (company number: 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF.

Meet the Author

Nathan Sweeney

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