The governor of the Bank of England has declared that UK inflation is cooling more rapidly than expected, as policymakers gather in Washington DC to discuss the state of the global economy.
Andrew Bailey told an event organised by the Institute of International Finance last night that prices were rising slower than he would have expected.
Bailey said: “If you’d ask me what inflation was going to be now, it would have been a bit higher than it is today.”
UK inflation hit a three-and-a-half-year low of 1.7% in September, below the Bank’s 2% target.
Bailey’s comments appear to be another hint that the Bank of England could lower interest rates at its meeting next month.
This morning, the money markets predict that a November rate cut, from 5% to 4.75%, is an 89% chance.
Those odds jumped at the start of this month, after Bailey told the Guardian that the Bank could become a “bit more aggressive” in cutting interest rates if inflation continued to cool.
Bailey is in Washington DC for the annual meetings of the International Monetary Fund and the World Bank Group.
Rachel Reeves will announce at the IMF a plan to change Britain’s debt rules that will open the door for the government to spend up to £50bn extra on infrastructure projects.
After weeks of speculation, the chancellor will confirm at the fund’s annual meetings in Washington today that next week’s budget will include a new method for assessing the UK’s debt position – a move that will permit the Treasury to borrow more for long-term capital investment.
Meanwhile, the building materials supplier Travis Perkins has cut its profit forecasts for the second time in three months, as sales continue to slide.
It has reported a 5.7% drop in revenues in the last three months, “driven by the merchanting segment”. That is worse than the 4.4% drop it reported in the first half of the year.
The agenda • 9am BST: eurozone composite PMI surveys for October • 9.30am BST: UK composite PMI surveys for October • 11am BST: CBI’s industrial trends survey of UK manufacturing • 1pm BST: IMF chief Kristalina Georgieva gives main press conference
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