LONDON — UK headline consumer price inflation cooled to 2.4 percent year over year in April, the Office for National Statistics reported Wednesday morning, below the consensus expectation of 2.6 percent and a meaningful step below the 3.1 percent print recorded for March. The figure firms market expectations for additional Bank of England rate cuts through the summer.

The print’s composition showed the bulk of the cooling concentrated in services-sector inflation, which had been the principal area of concern in recent Monetary Policy Committee communications. Services CPI cooled to 4.2 percent year over year against 4.7 percent in March, with the moderation driven by lower readings in restaurants, hotels, and recreation services. Core CPI, which strips out food, energy, alcohol and tobacco, came in at 3.1 percent year over year against the consensus 3.3 percent.

A senior ONS statistician, in commentary released alongside the figures, said the April reading reflected what he characterized as “the broad-based moderation we have been monitoring through the first quarter, now visibly extending into core categories.” The statistician noted that the breadth of the moderation across reported categories was the most substantively positive feature of the print.

The Bank of England had cut its policy rate by twenty-five basis points at the early-May meeting, bringing the bank rate to 4.50 percent. The minutes of that meeting, released the following week, had described the committee’s decision as “finely balanced” with several members preferring to maintain rates given lingering services-inflation concerns. The April CPI print materially eases those concerns and supports the case for an additional cut at the June meeting.

Gilts rallied sharply on the print. The ten-year gilt yield fell ten basis points to 3.97 percent in early London trading, while the two-year gilt yield fell fourteen basis points to 3.83 percent. The pound weakened against both the U.S. dollar and the euro, with sterling falling roughly seven-tenths against the dollar to $1.2812 by mid-morning London time. The FTSE 100 rose approximately one percent on the print.

Sonia futures markets repriced sharply on the print. The probability of a June rate cut, which had been trading at roughly fifty percent ahead of the release, moved to approximately seventy-eight percent by mid-morning London time. The terminal-rate expectation for year-end 2026 moved to 3.75 percent from 4.00 percent, implying three additional twenty-five-basis-point cuts over the back half of the year.

A senior Bank of England official, in scheduled remarks at a regional banking conference in Manchester Wednesday morning, said the print would be “carefully evaluated against the broader pattern” but acknowledged that the breadth of the moderation was “the kind of signal we have been waiting to see.” The official did not commit the bank to a specific June meeting outcome but indicated that the substantive policy framework was “broadly compatible” with the market’s interpretation of the print.

Bank Governor Andrew Bailey, in a brief Wednesday-afternoon Bank of England statement issued ahead of his testimony to the Treasury Select Committee scheduled for next week, said the April print represented “the kind of broad-based disinflationary pattern we have been monitoring for.” Bailey indicated that the bank’s substantive deliberation ahead of the June meeting would include “the standard careful evaluation” of the broader data flow but acknowledged that the April print “moves the framework forward.”

The print’s broader macro context is favorable for the bank’s policy framework. UK wage-growth data published last week had shown private-sector regular pay growth slowing to 4.6 percent year over year against 5.2 percent in the prior reading, with the slowing concentrated in services-sector wages. The combination of cooling wage growth and moderating services inflation removes substantial pressure from the bank’s framework heading into the June meeting.

A senior UK economist at a major global investment bank, in a Wednesday-morning client note, said the print “essentially locks in” a June rate cut and substantially raises the probability of additional cuts through the summer cycle. The economist noted that the substantive bar for the bank to maintain rates at the June meeting would now require “a meaningfully worse print on the wage-growth side” than current data flow would suggest.

The Chancellor of the Exchequer, Rachel Reeves, in a Wednesday-morning Downing Street statement, said the print represented “tangible progress” on the government’s inflation-management framework and indicated that the substantive fiscal posture for the autumn budget would be “informed by the broader disinflationary trajectory.” The Chancellor noted that the substantive timing of the autumn budget had been preserved as October 22 despite the developing macro environment.

A senior opposition Conservative finance spokesperson, in a Wednesday-morning statement, characterized the print as “consistent with the trajectory” the prior government had set in motion before the 2024 election. The substantive opposition response reflects the continuing contestation over the political ownership of the UK’s current macro trajectory.

International market response to the UK print was modest but constructive. The euro gained slightly on the dollar in the wake of the print, while European bond yields generally fell modestly across the curve. A senior European Central Bank official, in remarks delivered Wednesday afternoon at a Frankfurt policy event, said the UK print “supports the broader European disinflationary pattern” without specifically affecting the ECB’s policy framework.

The next major UK data point will be the preliminary Q1 GDP estimate, scheduled for release next Thursday morning. The print is expected to show the UK economy growing at approximately 0.4 percent quarter over quarter, a modest acceleration from the prior reading. The combined wage, CPI, and GDP data set will inform the bank’s deliberations at the June meeting on June 19.

The substantive policy implications of the April print extend beyond the immediate June meeting. The combination of moderating services inflation, slowing wage growth, and stable headline GDP creates the macro conditions for the bank to execute the steeper cutting path the market is now pricing. The cycle’s evolution through the autumn will substantially shape the UK macro framework heading into 2027.

The Bank of England’s June meeting is scheduled for June 19, with the Monetary Policy Report and Bank Rate decision released at noon London time and the Governor’s press conference following at 12:30 p.m.