Quotes from Capital Economics:- September’s sharp fall in CPI inflation from 1.5% to 1.2%, a five year low, supports those members of the Monetary Policy Committee arguing that there is still no hurry to raise interest rates. (Data released on Tuesday.) What’s more, CPI inflation looks set to fall further over the coming months, reflecting declining contributions to inflation from fuel, energy and import prices. – Indeed, by the end of the year, CPI inflation is likely to be a bit below 1%, forcing Mark Carney to write his first letter to the Chancellor explaining why inflation is more than 1% adrift from its target. – Granted, the MPC has raised interest rates many times before when the prevailing inflation rate has been below its target, and inflation is likely to edge up over the course of next year as the temporary influences of lower commodity and import prices fade. Nonetheless, the absence of any major underlying inflationary pressure should still ensure that interest rates rise at a very gradual pace by past standards.
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