Interest rate cut remains likely as inflation falls – Daily Business



Inflation slowed to 2.6% in the year to March, a bigger fall than expectations, and the second month in a row that the rate of price growth has eased.
Falling fuel prices were behind the fall from February’s 2.8% rate.
However, analysts expect inflation to rise to around 3% over the coming months, and peak at around 3.7% in the autumn as increases in household and business bills are factored into the figures.
Although the current level of inflation is above the Bank of England’s 2% target it is still expected to cut interest rates at its May meeting.
Chancellor Rachel Reeves said: “Inflation falling for two months in a row, wages growing faster than prices and positive growth figures are encouraging signs that our Plan for Change is working, but there is more to be done.”
Martin Sartorius, Principal Economist, CBI, said: “March inflation coming in broadly in line with Bank of England expectations is welcome news, particularly ahead of a likely pick up in price pressures in April due to higher energy costs, regulated price increases, and the passthrough of Autumn Budget measures.
“The introduction of higher US tariffs adds some uncertainty to the outlook, as they could put both upward and downward pressure on inflation in the UK.
“Businesses welcome the government’s ongoing commitment to the principles of free, fair, and open trade, as well as promising to go further and faster to support firms during this period of instability.
“Today’s data suggests that the Bank of England’s Monetary Policy Committee will likely cut rates next month. Looking ahead, we expect them to continue their ‘gradual and careful’ approach to reducing borrowing costs amid an uncertain economic environment.”
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