Bank of England Signals Rate Cuts as Inflation Eases
Summary
The central bank said on Thursday that it expected inflation to reach its target in two years, and then go even lower, a forecast that comes as policymakers inch toward cutting interest rates. When the inflation reading for April is published in two weeks, it is expected to show that price growth slowed to the central bank’s 2 percent target because of the effect of lower household energy bills. “We haven’t vanquished inflation yet,” said Tera Allas, director of research and economics at McKinsey’s Britain and Ireland office and a former economist in the civil service. At the same time, consumer spending is forecast to support economic growth as average wages rise faster than inflation and employment levels remain relatively strong, the bank said. Paula Bejarano Carbo, an associate economist at the institute, said the caution among central bankers was “reasonable” given there were still risks that inflation could go higher because of price pressures from, for example, the services sector.