Daily Express

Pres­sure on Bank to cut in­ter­est rates

- By David Shand Finance · Banking · Business · Bank of England · England · Office for National Statistics · Monetary Policy Committee

THE Bank of Eng­land is un­der pres­sure to cut in­ter­est rates at the end of the month af­ter in­fla­tion fell to its low­est level in over three years.

The 1.3 per cent an­nual rise in con­sumer prices in De­cem­ber was down from 1.5 per cent the pre­vi­ous month and the weak­est since Novem­ber 2016, ac­cord­ing to the Of­fice for Na­tional Sta­tis­tics.

Econ­o­mists had ex­pected an­other 1.5 per cent in­crease.

The ONS blamed a fall in the price of ho­tel stays and women’s cloth later ing as re­tail­ers stepped up dis­count­ing. Weak­ness in the econ­omy prompted two of the nine mem­bers of the Bank of Eng­land’s Mon­e­tary Pol­icy Com­mit­tee to vote last month for an in­ter­est rate cut from 0.75 per cent.

One of them, Michael Saun­ders, warned yes­ter­day there is a risk the econ­omy will be weaker for two years than col­leagues have pre­dicted. He said: “If we de­fer eas­ing near-term and, in the event of per­sis­tent weak­ness, face the need for greater eas­ing on, then risks of a low in­fla­tion trap – which would cer­tainly not be a be­nign out­come – would rise.”

Saun­ders said it was too early to say if last month’s elec­tion had given the econ­omy a boost but any im­prove­ment was likely to be small.

Ayush An­sal, chief in­vest­ment of­fi­cer at Crim­son Black Cap­i­tal, said: “Com­ing af­ter a triple whammy of weak re­tail sales and slow­downs in both the man­u­fac­tur­ing and service sec­tors, this sur­prise fall in in­fla­tion will ar­guably put the doves in the driv­ing seat at the Bank.

“When the MPC meets [on Jan­uary 30], the pos­si­bil­ity of an in­ter­est rate cut will now be firmly on the ta­ble.”

 ??  ?? Fear of de­lay… Michael Saun­ders
Fear of de­lay… Michael Saun­ders

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