Wed Sep 18 06:07:46 UTC 2024: ## Inflation Holds Steady, Dashing Hopes of Bank of England Interest Rate Cut
**LONDON, UK** – Hopes for a Bank of England interest rate cut tomorrow were dashed today as inflation remained unchanged from the previous month. The headline Consumer Price Index (CPI) remained at 2.2% in August, despite the recent drop to 5% from 5.25% last month.
The news has dampened expectations for a further easing of monetary policy, which many had hoped would help struggling Britons.
Core inflation, which excludes volatile items like food and energy, rose slightly to 3.6% in August, up from 3.3% the previous month. This suggests that underlying price pressures remain significant.
The Bank of England’s Monetary Policy Committee (MPC) is expected to announce its latest interest rate decision tomorrow at noon. Markets had been pricing in a one-in-five chance of a rate cut, but today’s inflation figures make that prospect unlikely.
“Inflation held steady in August as various price fluctuations offset each other,” said ONS Chief Economist Grant Fitzner. He highlighted the contrasting impacts of rising airfares and falling fuel prices, as well as fluctuations in restaurant and hotel costs.
Economists have warned that inflation remains in a “difficult phase,” with the services sector continuing to see strong price pressure.
“While the increase in services inflation confirms that it remains a key barrier to keeping the headline rate consistently at or below target, the growing squeeze on wages should help put it on a firmer downward path,” said Suren Thiru, Economics Director at ICAEW.
Following today’s data release, most analysts now believe the MPC will pause on interest rate cuts until after next month’s budget, hoping to assess the impact of potential fiscal measures.
Despite the stable headline inflation rate, the government acknowledged the ongoing challenges facing British households.
“Years of sky-high inflation have taken their toll; and prices are still much higher than four years ago,” said Chief Secretary to the Treasury Darren Jones. “While more manageable inflation is welcome, we know that millions of families across Britain are struggling, which is why we are determined to fix the foundations of our economy so we can rebuild Britain and make every part of the country better-off.”
However, the opposition Labour Party pointed to the need for further action to control inflation.
“Labour inherited inflation at the Bank of England’s target and today’s figures show they must do the hard work to keep inflation down, as we did in Government,” said shadow chancellor Jeremy Hunt. “That includes rejecting potentially damaging new employment rights which will put up the cost of labour and ultimately raise prices as a result.”
The Bank of England’s decision on interest rates tomorrow will be closely watched by businesses and consumers alike, with the economy facing ongoing challenges from high inflation and a potential recession.
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