Andrew Bailey, governor of the Bank of England, is keen to get inflation down to a 2 per cent target
(AFP or licensors)
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The Bank of England is expected to keep interest rates the same, despite a fall in inflation on Wednesday.
Inflation fell to 3.4 per cent in February – down from 4 per cent in January and the lowest since September 2021, when it was 3.1 per cent.
The positive news on inflation comes ahead of the BoE’s latest interest rate decision on Thursday, with policymakers widely expected to keep rates on hold at 5.25 per cent.
In February when the group met, only one of them, Swati Dhingra, voted to cut rates, two voted for a rise, but the rest said they should stay at 5.25%.
Robert Wood, chief UK economist at Pantheon Macroeconomics, said he expects the same vote this time.
The BoE said in February that it expects inflation to fall back to its target of two per cent between April and June this year, about 18 months earlier than it previously forecast.
Chancellor says inflation figures could open door for interest rates drop
Mr Hunt said: “Inflation has not just fallen decisively but is forecast to hit the 2% target within months.
“This sets the scene for better economic conditions which could allow further progress on our ambition to boost growth and make work pay by bringing down national insurance as we work towards abolishing the double tax on work.”
He told broadcasters: “As inflation gets closer to its target, that opens the door for the Bank of England to consider bringing down interest rates, that brings down mortgage rates, that makes a very big difference.
“It’s far too early to know whether we’ll have another fiscal event before the election, but what I would say is that what you can see is the difficult decisions the Government has taken over the last year are paying off.”
(PA Wire)
Sam Rkaina20 March 2024 19:20
Inflation eased more than expected in February
Inflation eased back by more than expected in February, boosting hopes that a cut in interest rates could be on the cards within months.
Official figures showed Consumer Prices Index (CPI) inflation fell to 3.4% in February, down from 4% in January and the lowest level since September 2021, thanks to the cost of food and eating out rising more slowly.
Chancellor Jeremy Hunt hinted that the “decisive” drop in inflation could give him room to further reduce national insurance, but played down suggestions that this would mean pre-election tax cuts in an autumn statement.
Experts said inflation is now likely to fall back below the Bank of England’s 2% target in April or May, thanks to the scheduled 12% fall in the energy price cap on April 1.
This could pave the way for the Bank to start cutting rates possibly as early as June, according to many economists.
Sam Rkaina20 March 2024 18:46
Lowest inflation since 2021 brings hope of summer interest rate cut
The Bank of England’s decision on what it should do with interest rates comes after better-than-expected inflation figures.
The figures released by the Office for National Statistics (ONS) on Wednesday morning showed that inflation was 3.4 per cent in February, which is slightly lower than the 3.5 per cent predicted by economists.
This is the lowest level inflation has been at since September 2021. The latest figures are moving gradually closer to the BoE’s 2 per cent inflation target.
Joe Middleton20 March 2024 18:01
Welcome
Hello and welcome to the Independent’s live coverage of the Bank of England’s latest decision on what they should do with interest rates, which are currently at 5.25 per cent.
Speculation is rife in financial markets that policymakers will hold steady and choose to keep interest rates at the same level.
Read our preview of the decision here:
Joe Middleton20 March 2024 17:59
