LONDON- Inflation rates in Britain sank unexpectedly over a three-year low after slashed hotel prices in December. This ramped up hopes that the Bank of England may cut their interest rates, hopefully by this month.
On Wednesday, consumer prices showed a hike of 1.3% as compared to 1.5% in November. This is the smallest increase since November 2016.
The pound slid under $1.30 and the prices of UK government bonds shot higher, all of which were below forecasts.
Since 2020 began, officials of BoE voiced their concerns regarding the British economy’s strength, rising financial market expectations on voting to cut interest rates as soon as this month.
On Wednesday, Micheal Saunders, rate-setter for BoE, said that interest rates must be cut right away to avoid the UK from getting stuck in a low-inflation trap because of a weak labour market and a slow economy.
In December, a third of the hotels and most women’s clothing brands reported falling prices.
(Photos syndicated via Reuters)
This story has been edited by BH staff and is published from a syndicated field.