Is Liz Truss about to U-turn? The Westminster grape vine is buzzing with informed speculation that the government is set to abandon more of the measures in the mini-Budget in an attempt to regain the confidence of the market and Tory MPs. I am told that members of Liz Truss’s political team who had previously resisted the idea that anything further needed to change are now beginning to accept that more of the mini-Budget will have to be scrapped.
The problem for the government is that the markets are now pricing on the basis of a U-turn – UK gilts have rallied on the reports. So if the government doesn’t end up changing course it will be in a worse position than it was 24 hours ago and facing a fresh market backlash.
In further bad economic news, US inflation has come in above expectations. This means that the Federal Reserve is likely to hike interest rates further, probably two more 75 basis points hikes.
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