This marks the 150th edition of Ear to the Ground. I have frantically been trying to find a relevance for 150 in economic or investment market terms but have failed miserably. I can therefore only relate to my love of darts. It’s great to watch on the television and the atmosphere looks amazing. I also don’t mind playing a round or two with the family, however, my aim is not the best shall we say. I probably have a greater chance of winning the jackpot on the lottery (hypothetically speaking) than hitting the bullseye with each of the three darts in my hand. And there lies my rather weak link to 150. Apologies!

After the plethora of central bank meetings last week it was the turn of the Bank of England to decide on monetary policy this week. As expected, the rate setting committee took the decision to cut by 0.25%, bring the base rate down to 4.5%. This marked the third reduction by 0.25% since the current cutting cycle began.

Whilst the cut was very much expected, the change in the voting pattern of the nine committee members was perhaps not. Whilst all voted in favour, it was surprising that two members had voted for a more aggressive 0.5% cut. This was perhaps due to the downward revision to economic growth which the Bank of England gave for 2025. Here they halved the forecast from 1.5% to 0.75%. Whilst inflation should move back towards the 2% target for the forecast period, they believe that consumer price inflation could rise to 2.75% by the second half of this year, driven by higher energy and regulated prices. This will ultimately be reflected in household bills. As we would expect, the usual fan charts produced leave plenty of room for variability in the inflation outcome. The UK 10 year gilt yield has crept lower this week, hovering around the 4.5% level.

In our previous edition was talked about the introduction of tariffs on Canada, Mexico and China by the US. For now they appear to have been averted for the first two, with phone calls and compromises meaning they have a 30 day reprieve. The tariff on China however pushes ahead and they have introduced their own counter measures. We have no doubt there will be more news to come here, with the European Union looking carefully over their shoulder.

Sticking with the US, there was a much welcomed moved back above 50 for the ISM Manufacturing Purchasing Managers Index (PMI). A reading above 50 suggests that the sector is in an expansionary phase, something which has not been seen for over two years. The same index but for the services sector also maintains a reading above 50, although it was a little lower this time around.

The eagerly awaited non-farm payroll data meanwhile surprised to the downside. 143,000 jobs were added in January, which was lower than the consensus forecast of 170,000. Whilst this was lower, we saw a significant revision upward to the December figure. It was initially reported that 256,000 jobs were added but this was uplifted to 307,000. Wage growth also picked up, increasing 4.1% year on year compared to 3.9% reported in December and a forecast of 3.8%. Perhaps understandable why the US Federal Reserve remained on hold last week. The US dollar is a little stronger against sterling on the back of the news.

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