12 March: UK Updates To Follow Next Week
Today’s US inflation figures show prices rising by a headline rate of 3.2% in the year to February, a shade up from the 3.1% annual rise recorded in January, while month on month the increase was 0.4%, up from 0.3%.
The core annual rate, which excludes notoriously volatile food and energy prices, fell to 3.8% from 3.9%, with the core monthly rate unchanged at 0.4%.
Inflation figures in national economies are used by central banks such as the Federal Reserve (Fed) in the US and the Bank of England to determine interest rate policy.
The relatively modest uptick in the US headline rate is expected to deter the Fed from reducing rates before June at the earliest – they are currently in the range 5.25% to 5.5%. Previously, commentators had believed a cut this month might have been forthcoming (the Fed’s next announcement is due on Wednesday 20 March).
In the UK, the latest inflation rate announcement from the Office for National Statistics is also due on Wednesday next week, with the Bank of England’s latest decision on its Bank Rate due the following day.
UK inflation is currently 4% a year, with the Bank Rate of 5.25% unchanged since last August. There is little expectation of a Bank Rate cut this month, especially given today’s figures from the US.
That said, in his Budget speech last week, the Chancellor Jeremy Hunt said he expects UK inflation to fall to the Bank of England’s target…
