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Weakest U.K. Inflation in Three Years Lowers Bar to BOE Cut


Wednesday, 15 January 2020 16:43 WIB

InflasiEkonomi inggrisCPI U.K


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U.K. inflation unexpectedly slowed to a three-year low in December, clearing the path to a potential Bank of England interest-rate cut this month.

Consumer prices rose 1.3% from a year earlier, the least since November 2016, the Office for National Statistics said Wednesday. The core inflation rate posted a surprise fall to 1.4%.

The shock readings will fuel speculation about an imminent rate cut after dovish comments from BOE Governor Mark Carney and other policy makers in recent days. Money markets now see a more than 40% chance of a quarter-point reduction on Jan. 31.

Inflation has been below the BOE’s 2% target since August and economists expect it to continue to undershoot until at least the middle of next year, thanks in part to the appreciation of sterling last year.

That’s good news for the purchasing power of consumers, with wages now rising by more 3% a year.

But political turmoil over Brexit caused the economy to weaken sharply at the end of last year, and several BOE officials have said they could now join those already pushing for a rate cut if surveys taken after Boris Johnson’s election win don’t show a significant pickup.

Source : Bloomberg


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