Growth Holds, But Inflation Clouds the Outlook

NatWest’s Chief Economist Commentary reviews how UK and global growth momentum contrasts with stubborn inflation, complicating policy paths.

• UK: CPI hit 3.8% in July, the highest in 18 months, reducing the probability of a November rate cut; services inflation and energy costs remain sticky despite solid PMI-driven growth.

• US: Powell’s dovish Jackson Hole pivot raised cut expectations, but strong August business activity and tariff-driven input costs threaten inflation persistence.

• Eurozone: Inflation steady at 2% with PMIs improving, bolstering prospects for an ECB cut.

For deeper insights into growth-inflation trade-offs and market implications, read the full report