Better inflation data gives Bank of England more scope to cut interest rates

• New inflation data showed the current rate is 1.7% (on the CPI measure). Inflation being back under target gives the Bank of England more scope on interest rates.

• There are some elements that are still causing concern. The part of inflation that is proving ‘sticky’ is service inflation which remains high at 5.6%.

• Goods inflation is much lower and indeed negative at -1.4%. This is actually the largest negative rate for goods inflation since August 2016.

• Despite some stickiness in parts of the inflation data there is still scope for the Bank of England to cut interest rates.

• October consensus forecasts showed expectations are for an average Bank rate of 4.7% by end Q4 2024. The next meeting is November 7th. Source: Dataloft by PriceHubble, ONS, HM Treasury Consensus Forecasts