This material includes forward-looking statements subject to risks and uncertainties; actual results may differ.
U.K. Economy Surges in February, but Iran Conflict Clouds Outlook
The U.K. economy grew 0.5% in February, far exceeding expectations, with gains across services, production, and construction. This followed modest growth in January, suggesting a short-term rebound in activity. However, economists caution that the data is backward-looking and doesn’t reflect the economic fallout from the Iran conflict, rising unemployment, and weakening demand. Looking ahead, growth is expected to slow, inflation may rise due to energy shocks, and the Bank of England is likely to hold or potentially raise rates amid heightened uncertainty.
Fed Signals Extended Pause Risk
Federal Reserve Governor Christopher Waller said policymakers may need to hold interest rates steady for an extended period as inflation risks and labor market weakness create a difficult policy backdrop. While job growth is near zero, the labor market appears stable for now, though vulnerable to a potential downturn. Waller warned that recent shocks, including tariffs and the Iran conflict, could lead to more persistent inflation rather than a temporary spike. As a result, the Fed may keep rates unchanged if inflation risks outweigh concerns about employment.
Stocks extend strong rally
Stocks pushed higher for the second straight week, continuing a strong upward run despite ongoing geopolitical and economic uncertainty. Markets were supported by resilient earnings expectations and investor optimism that major risks, including the Iran conflict, may not derail growth as severely as feared. The rally has been somewhat narrow, with leadership concentrated in select sectors, but overall momentum remains positive. Still, volatility lingers beneath the surface as markets remain highly sensitive to developments in energy prices, interest rates, and global events.
As always, Base Wealth Management remains focused on aligning investment strategies with your long-term goals amid evolving market conditions.
