Unchanged Inflation of 4 Percent Ignites Hopes for Interest Rate Cuts

Consumer price inflation (CPI) remained unchanged in January at 4 percent, which was slightly weaker than expected by the Bank of England (BoE) and the financial markets. The latest Office of National Statistics figures indicate that annual CPI remained unchanged from December, inviting speculation on whether the BoE will follow by lowering interest rates further into the year. The BoE needs more evidence that inflation will fall further sustainably before it lowers interest rates, which it held at 5.25 percent on Feb. 1. The bank expects inflation to hit its 2 percent target in the second quarter 2024, before increasing again in subsequent quarters. “We’ve come a long way and while we can’t yet declare victory in the battle against inflation, we are heading in the right direction,” said BoE Governor Andrew Bailey....