We doubt that the lower peak in CPI inflation than most feared will prompt the Bank of England to cut interest rates from 4.00% at its next policy meeting on 6th November. At 3.8% in September, CPI inflation was still almost twice the 2.0% target and compares to the rate of 2.2% in the euro-zone. But it increases the chances of the next interest rate cut happening in February, in line with our forecast, or perhaps a bit sooner in December. It also supports our view that interest rates will be reduced to 3.00% next year.
We’re hosting a 20-minute online briefing at 9.30am BST today to discuss the outlook for inflation and the implications for both the Bank of England and the Chancellor. (Register here.)
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