New Star: Fall in inflation

Simon Ward, Economist at New Star, comments on the fall in inflation: “The move below target, though possibly temporary, should temper the MPC’s worries about a pick-up in inflation expectations fuelling higher wage demands. The decline was concentrated in the “core” index and suggests that underlying inflationary pressures are less acute than some feared. Coupled with recent evidence of consumer and housing market cooling, today’s news adds support to our view that a further rise in interest rates is avoidable.”