The latest report from Britain’s Office for National Statistics revealed that consumer prices in the country experienced the slowest increase in two and a half years. Inflation stood at 3.2 percent in the year leading up to March, slightly lower than February’s 3.4 percent but slightly higher than the anticipated 3.1 percent. Core inflation, excluding volatile food and energy prices, was at 4.2 percent, a decrease from the previous month’s 4.5 percent.
Economists foresee a continued decline in inflation in the coming months, potentially dropping below the Bank of England’s 2 percent target as household energy costs decrease. The country’s overall inflation reached its peak at 11.1 percent in October 2022.
The weakening economy has prompted calls for the central bank to consider lowering interest rates. Recent data showed a higher-than-expected rise in Britain’s unemployment rate, adding to the challenges faced by policymakers.
This situation poses a dilemma for the Bank of England, as noted by economist Jake Finney from PwC. While decreasing inflation pressures the bank to reduce rates to stimulate economic growth, policymakers are likely waiting for more concrete evidence of sustained progress before making such a move.
In its most recent meeting, the Bank of England opted to maintain its key rate at 5.25 percent for the fifth consecutive time. Similarly, the U.S. Federal Reserve has kept rates unchanged, with officials indicating a cautious approach towards rate cuts due to persistent inflation concerns.
Meanwhile, the European Central Bank hinted at a potential interest rate cut in June, reflecting the slowing inflation and sluggish economic conditions in the eurozone.
2024-04-17 03:39:57
Post from www.nytimes.com