In December, UK inflation dipped to 2.5%, helping reduce government borrowing costs and raising expectations for potential Bank of England rate cuts. Meanwhile, US inflation rose to 2.9%, driven by energy prices. Core inflation in the US held at 3.2%. Concerns over US tariffs under President-elect Trump add uncertainty. Analysts suggest the reduced UK inflation offers the Bank of England more leeway for interest rate adjustments, as UK bond yields fell significantly, providing some relief amid broader global market volatility. The economic outlook remains cautious as rising energy prices could impact future inflation.