There is a growing feeling that inflation may be close to the lowest level that is achievable given current monetary policy. The rate hikes that have taken place can only reduce demand to a finite degree before they drive the economy into recession.The Bank of England is acutely aware that the economy will also be relying on a “global effect” from energy and food prices to bring price increases back close to the Government’s 2% target.While the fall in inflation over the past few months has been encouraging for those who want rate cuts to begin sooner rather than later, just as rate the final one or two hikes were critical in the fight against inflation, so the timing of cuts is just as vital. Too soon and inflation may reignite, too late and the economy will fall into a more prolonged recession.Former MPC member DeAnne Julius, who was a member of the rate-setting committee in calmer times, voted to maintain rates at more than half of her forty-five meetings, spoke yesterday of her opinion that the Bank of England may not be in a position to cut rates at all this year given the possibility of a fresh energy shock in response to any escalation of the conflicts in Ukraine and Gaza.The tensions that exist, particularly in Gaza, make a fresh energy shock a significant possibility. If that were to happen, it would leave the Bank of England’s plans in tatters and have a major effect on the Government’s ability to lower taxes both pre- and post-election as they have promised recently.Beyond Currency Market Commentary:Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.