Bank of England
Andrew Bailey has predicted a “strong drop” in inflation next month, even as official figures showed prices rose more quickly than expected in March.
The Governor of the Bank of England said inflation was “on track” to fall to 2pc within months, driven by cheaper household bills as the energy price cap falls.
Official figures showed inflation eased to 3.2pc in March from 3.4pc in February. However, the rate was slightly higher than predicted by economists.
Mr Bailey sought to allay concerns that the Bank of England would keep interest rates at 5.25pc for longer amid fear over persistent price rises.
Speaking at an event in Washington organised by the Institute of International Finance, he said: “We’re actually pretty much on track for where we thought we will [sic] be in February.”
It suggests that the Bank’s prediction that inflation will fall to its 2pc target by the second quarter of the year is still on track.
Mr Bailey added: “Where we are today is we have [inflation] numbers falling. I expect that next month’s number will show quite a strong drop because we have a particularly unique energy to household energy pricing systems in the UK.
“So I would expect inflation to come down towards target. Where exactly around target, we’ll see.”
He said policymakers would continue to assess the appropriate time to cut rates “each time” they meet, with the next decision in just three weeks.
Mr Bailey stressed there were “still very big risks out there”, including instability in the Middle East. The Bank also expects inflation to pick back up in the second half of the year.
However, he added: “There has been quite a change in the UK situation. We are experiencing quite a pronounced period of disinflation, thank goodness.”
The Bank of England is now expected to cut interest rates twice this year, taking borrowing costs to 4.75pc by the end of 2024. At one point traders had expected five rate cuts.
Money markets indicate policymakers could wait as late as August before beginning to reduce borrowing costs.
Grant Fitzner, chief economist at the ONS, said: “Once again, food prices were the main reason for the fall, with prices rising by less than we saw a year ago. Similarly to last month, we saw a partial offset from rising fuel prices.”
The jump in fuel prices is likely to continue amid rising tensions in the Middle East, particularly after Iran’s recent attack on Israel.
Yael Selfin at KPMG warned that while inflation could soon return to the Bank’s 2pc target, risks remained high.
Ms Selfin said: “The overall outlook for inflation remains broadly positive, however there are several risks which could cause a setback.
“Oil prices have rallied over the past month which has led to an increase in prices at the pump for consumers. Also, the hike in the National Living Wage could potentially contribute to persistence in services inflation which remains elevated.”
Chancellor Jeremy Hunt said the latest fall in inflation was a sign that “the plan is working”.
Mr Hunt said: “Inflation is falling faster than expected, down from over 11pc to 3.2pc, the lowest level in nearly two and a half years, helping people’s money go further.”
Separate figures confirmed that inflation in the eurozone fell to 2.4pc in the year to March, down from 2.6pc the previous month. It paves the way for the European Central Bank to start cutting rates in the coming months.
Play The Telegraph’s brilliant range of Puzzles – and feel brighter every day. Train your brain and boost your mood with PlusWord, the Mini Crossword, the fearsome Killer Sudoku and even the classic Cryptic Crossword.
News Related
-
Asylum seekers travel in an inflatable boat across the English Channel, bound for Dover on the south coast of England (Photo: Ben Stansall/AFP) Up to 40 Conservative MPs are poised to rebel over Rishi Sunak’s Rwanda deportation policy as they question ministers’ commitment to the scheme. A major row is ...
See Details:
Up to 40 Tory MPs ‘set to rebel’ if Sunak’s Rwanda plan doesn’t override ECHR
-
In the saltmarsh fringing where the Ballyboe River dissolves into Trawbreaga Bay, a little egret wears its plumage like a windblown stole. Our car swoops across the 10 arches of Malin bridge and we park along the village green. Malin is almost as far north as you can get on ...
See Details:
Country diary: A tale of three churches
-
Photograph: Chris Ratcliffe/EPA Hampton Court is an enduring monument to the power of Henry VIII, a pleasure palace down the Thames from Westminster and the City of London. On Monday it was the scene of power projection of a different kind, as Rishi Sunak pitched for investment from some of ...
See Details:
Sunak woos business elite with royal welcome – but they seek certainty
-
-
Tottenham interested in move to sign “fearless” £20m defender in January Tottenham Hotspur have joined the race to bring an overseas defender to the Premier League in January, according to a fresh report. Postecoglou’s centre-back options The Lilywhites currently have Micky Van De Ven, Ashley Phillips, Cristian Romero and Eric ...
See Details:
Tottenham interested in move to sign “fearless” £20m defender in January
-
A £100m campaign urging households and businesses to use less water will be funded from customers’ bills, Ofwat has said. Bill payers to stump up cost of £100m water usage campaign The regulator’s chief executive David Black told MPs that if the measures worked it would be cheaper than building ...
See Details:
Bill payers to stump up cost of £100m water usage campaign
-
FILE PHOTO: Soccer Football – FIFA Women’s World Cup Australia and New Zealand 2023 – Group B – Canada Training – Olympic Park, Melbourne, Australia – July 24, 2023 Canada’s Christine Sinclair during training REUTERS/Hannah Mckay/File Photo (Reuters) – BC Place in Vancouver, British Columbia, will be renamed “Christine Sinclair ...
See Details:
Soccer-Venue renamed 'Christine Sinclair Place' for Canada soccer great's final game
-
Michael van Gerwen is hunting down a fourth World Championship title (Picture: Getty Images) Michael van Gerwen is Phil Taylor’s tip to lift the World Darts Championship trophy for a fourth time in January, expecting a backlash from the recent defeat in the Players Championship Finals. The 2024 World Championship ...
See Details:
Phil Taylor makes his pick for 2024 World Darts Championship winner
-
Michael van Gerwen is hunting down a fourth World Championship title (Picture: Getty Images) Michael van Gerwen is Phil Taylor’s tip to lift the World Darts Championship trophy for a fourth time in January, expecting a backlash from the recent defeat in the Players Championship Finals. The 2024 World Championship ...
See Details:
Soccer-Howe aims to boost Newcastle's momentum in PSG clash
-
Michael van Gerwen is hunting down a fourth World Championship title (Picture: Getty Images) Michael van Gerwen is Phil Taylor’s tip to lift the World Darts Championship trophy for a fourth time in January, expecting a backlash from the recent defeat in the Players Championship Finals. The 2024 World Championship ...
See Details:
Hamilton heads for hibernation with a word of warning
-
Michael van Gerwen is hunting down a fourth World Championship title (Picture: Getty Images) Michael van Gerwen is Phil Taylor’s tip to lift the World Darts Championship trophy for a fourth time in January, expecting a backlash from the recent defeat in the Players Championship Finals. The 2024 World Championship ...
See Details:
Carolina Panthers fire head coach Frank Reich after 1-10 start to the season
-
Michael van Gerwen is hunting down a fourth World Championship title (Picture: Getty Images) Michael van Gerwen is Phil Taylor’s tip to lift the World Darts Championship trophy for a fourth time in January, expecting a backlash from the recent defeat in the Players Championship Finals. The 2024 World Championship ...
See Details:
This exercise is critical for golfers. 4 tips to doing it right
-
Michael van Gerwen is hunting down a fourth World Championship title (Picture: Getty Images) Michael van Gerwen is Phil Taylor’s tip to lift the World Darts Championship trophy for a fourth time in January, expecting a backlash from the recent defeat in the Players Championship Finals. The 2024 World Championship ...
See Details:
One in three households with children 'will struggle to afford Christmas'
-
OTHER NEWS
Kobbie Mainoo made his first start for Man Utd at Everton (Photo: Getty) The Football Association are reportedly confident that Manchester United starlet Kobbie Mainoo will choose to represent England ...
Read more »
Michael Smith will begin the defence of his world title on the opening night (Picture: Getty Images) The 2024 World Darts Championship is less than three weeks away and the ...
Read more »
For the first time a long haul commercial aircraft is flying across the Atlantic using 100% sustainable aviation fuel (SAF). A long haul commercial flight is flying to the US ...
Read more »
The King has met business and finance leaders from across the world at a Buckingham Palace reception to mark the conclusion of the UK’s Global Investment Summit. Charles was introduced ...
Read more »
After Ohio State’s 30-24 loss to Michigan Saturday, many college football fans were wondering where Lou Holtz was. In his postgame interview after the Buckeyes beat Notre Dame 17-14 in ...
Read more »
Darius Slay wouldn’t have minded being penalized on controversial no-call No matter which team you were rooting for on Sunday, we can all agree that the officiating job performed by ...
Read more »
New England Patriots quarterback Mac Jones (10) Quarterback Mac Jones remains committed to finding success with the New England Patriots even though his future is up in the air following ...
Read more »