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The disappointing CPI data makes Thursday’s Bank of England meeting even more unresolved. ING economists analyze the outlook for the pound ahead of the interest rate decision.
Bank of England raises interest rates in doubt after CPI falls short of expectations
A sharp fall in UK inflation has cast serious doubts on whether the Bank of England will raise interest rates. Although overall CPI was expected to rebound to 7.0% in August, CPI fell to 6.7% from 6.8% in August. On top of that, core inflation slowed sharply, to 6.2% from 6.9% (consensus 6.8%). Services inflation, the Bank of England’s most closely watched indicator, fell to 6.8% from 7.4%, below the Bank’s own August forecast.
