On Friday, Chinese policymakers lowered their inflation target to around 2%. By Monday, the National Bureau of Statistics reported that February’s Consumer Price Index (CPI) had fallen 0.7% year over year, with core inflation—excluding food and energy—declining by 0.1% last month.
The data suggests lingering deflationary pressures and weak domestic demand, despite recent AI-driven investor optimism. Economists advocate further monetary easing, though comparisons to an early Lunar New Year may distort trends. Meanwhile, at last week’s National Commerce Work Conference, officials set a 5% consumption growth target for 2025, aiming to boost trade and stimulate demand.
The latest survey from the Recruitment and Employment Confederation, released Monday, indicated that the UK job market cooled in February, though at a slower pace than January. The softer decline suggests that expectations of future rate cuts and stronger-than-anticipated economic data may be easing pressures on businesses.
That said, the Bank of England is widely expected to hold interest rates steady at 4.5% in its meeting next week. Policymakers may weigh potential rate cuts against the possible impact of April’s increases in National Insurance contributions and the minimum wage. Compounding this, wage growth continues to trend lower, moving below the 6% seen in Q4 2024.