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Macro EconomyMediumUpdated•Originally published 20 February 2026•Updated 20 February 2026•

1 min read

US and UK Economic Resilience Challenges Rate Cut Expectations for Fed and BoE

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Commerzbank analysts project US GDP growth to reach 3.7% in Q4, significantly outperforming the 3.0% consensus, while core PCE is expected to rise by 0.36%. Simultaneously, the UK economy showed unexpected strength as the composite output PMI rose to 53.9 in February, defying forecasts of a decline. Nomura analysts have also projected UK GDP growth of 0.2% for the first quarter of 2024, signaling a recovery from previous stagnation. This robust activity in both the US and UK suggests upside risks to growth and persistent inflation, challenging current market pricing for interest rate cuts by the Federal Reserve and the Bank of England. Consequently, the 'higher-for-longer' narrative is gaining momentum, supporting the US Dollar and Pound Sterling while pressuring bond markets and delaying expectations for monetary easing.

3 months ago

Version History

Version 13 months ago

What changed: Expanded coverage to include UK economic data showing unexpected strength in PMI and Nomura's GDP forecasts, impacting Bank of England rate expectations alongside the US Federal Reserve outlook.