But despite any drop inflation, Bell does not expect the Bank of England to be prompt in raising rates. 

His view is that with a general election coming this year, the next budget will contain tax cuts and perhaps spending commitments – both items that would typically be expected to be inflationary.

In those circumstances he expects the BoE to “wait for the splurge to happen”, before deciding whether to raise rates.

In contrast, with several European countries pursuing policies where governments are being more restrained in terms of spending, “the European Central Bank may be keener to lift rates”. 

Miller’s view is that the timing of rate cuts may be less important than the signalling by central banks that such cuts are on the agenda, as it improves the confidence of consumers – a phenomenon known in economics as 'animal spirits'.

Market implications 

Mai says the major impact on markets of the present may be that, in his view, many assets are present “priced for perfection”, that is, priced for the current goldilocks scenario to continue.

His view is that the part of the goldilocks scenario that may not play out as expected is the rate cuts, as he feels that central banks may be wary of cutting too early or too far, as it risks striking inflation again. 

Rupert Thompson, chief economist at Kingswood, puts some flesh behind the numbers.

He says: “The US Federal Reserve is undoubtedly keen to minimise the risk of a recession ahead of the November elections and is forecasting rates to be cut 0.75 per cent this year. But this decline is 1 per cent less than the market is now pricing in.

"In the UK, the market’s view that rates will fall 1.4 per cent this year is also at odds with the guidance from the BoE, which remains cautious.

"The optimism is being fuelled by the unexpectedly sharp decline in UK inflation seen in November. Indeed, there is increasing speculation that inflation could fall back to the 2 per cent target over the summer, much sooner than the BoE has been forecasting.” 

He adds: “The global economic backdrop is looking distinctly better than it was a few months ago. Activity has held up surprisingly well, inflation has fallen back faster than expected and rates now look set to be cut significantly over the coming year.

"While much of this good news is priced in, we believe there are still opportunities to exploit, particularly in the cheaper areas of the markets.”  

David Thorpe is investment editor at FTAdviser