LONDON (AP) — Britain’s inflation rate slipped in January
below the official 2 percent target for the first time since 2009,
making it less likely that the Bank of England will move soon to raise
interest rates.
Official figures on Tuesday showed consumer prices
were up 1.9 percent in the year to January, down from the 2 percent
rate in December. The drop was due to retailers slashing prices on
furniture, alcohol and tobacco.
Chris Williamson, the chief
economist of Markit, described the combination of falling inflation and
strong economic growth as a "Goldilocks" scenario.
The Bank of
England’s policymakers will be able "to keep their foot on the
accelerator for longer via lower interest rates to help drive a strong
and more sustainable recovery."
Until recently the bank had been
indicating that its key interest rate would remain at the record low of
0.5 percent until joblessness fell to a more tolerable level. Once that
unemployment threshold neared, Mark Carney, the bank’s governor, decided
to update the so-called forward guidance to broaden the range of
indicators that would be considered before rates are raised.
The low inflation number will give the bank even more freedom to let the economy strengthen before
deciding to act on rates.
Copyright 2014 The Associated Press. All rights
reserved. This material may not be published, broadcast, rewritten or
redistributed.
LONDON (AP) — Britain’s inflation rate slipped in January
below the official 2 percent target for the first time since 2009,
making it less likely that the Bank of England will move soon to raise
interest rates.
Official figures on Tuesday showed consumer prices
were up 1.9 percent in the year to January, down from the 2 percent
rate in December. The drop was due to retailers slashing prices on
furniture, alcohol and tobacco.
Chris Williamson, the chief
economist of Markit, described the combination of falling inflation and
strong economic growth as a "Goldilocks" scenario.
The Bank of
England’s policymakers will be able "to keep their foot on the
accelerator for longer via lower interest rates to help drive a strong
and more sustainable recovery."
Until recently the bank had been
indicating that its key interest rate would remain at the record low of
0.5 percent until joblessness fell to a more tolerable level. Once that
unemployment threshold neared, Mark Carney, the bank’s governor, decided
to update the so-called forward guidance to broaden the range of
indicators that would be considered before rates are raised.
The low inflation number will give the bank even more freedom to let the economy strengthen before
deciding to act on rates.
Copyright 2014 The Associated Press. All rights
reserved. This material may not be published, broadcast, rewritten or
redistributed.