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UK inflation falls to 13-month low, sending pound sliding – business live

Cheaper airfares helped to pull Britain’s inflation rate down to 2.4% last month

Professor Costas Milas of the University of Liverpool agrees that the case for the Bank of England raising interest rates in August is fading.

He explains:

The 2.4% CPI inflation reading for April is already (slightly) lower than the most likely outcome (the so called ‘mode’) of 2.43% predicted for the second quarter of 2018 by the MPC’s Inflation Report only a few weeks earlier.

If CPI inflation falls further in May, they will most likely have to revise their inflation forecasts downwards which will obviously make the case for an August interest rate hike even weaker.

Newsflash: Investors have slashed the chances of a UK interest rate hike in August to just a third:

(Bloomberg) MARKET IMPLIED PROBABILITY OF A BANK OF ENGLAND RATE HIKE BOEWATCH BY AUGUST FALLS TO A THIRD FROM NEARLY HALF EARLIER THIS WEEK

“Britain’s next interest rate rise hasn’t just been kicked into the long grass, it has been sent sailing right out of the park.

“With consumer inflation continuing to fall – even in the face of rising fuel prices – the Bank of England is running out of reasons to raise rates.

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