Emma Wall, chief investment strategist at Hargreaves Lansdown, said: “UK jobs data may not have moved the equity market much this morning, but it has ramped up market expectations of rate cuts through 2026.
“Unemployment rose slightly to 5.2 per cent for the three months to the end of December, according to the Office of National Statistics, and there are more people out of work looking for jobs.
“Redundancies are also up. The post-pandemic jobs boom is well and truly over, and wage inflation is slowing.
“We agree with the market that this weakness in data confirms expectations that the Bank of England Monetary Policy Committee will cut rates next month – remember that split vote last time around – but we don’t think it’s bad enough to tilt the Committee to abandon its slow and steady approach.
“Two cuts through the year is still our base case, given where inflation is and the current trajectory.
“That said, if jobs data continues to weaken, and is coupled with stagnant or non-existent economic growth, we could see a ramping up of cuts in the second half.”
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