The markets are probably right to conclude that June’s drop in inflation, from 2.9% to 2.6%, has reduced the likelihood of an imminent rate rise. Admittedly, the dip in inflation needn’t rule out a rate hike at the MPC’s August meeting. For a start, the drop in inflation is unlikely to prove the start of a downward trend. And June’s figure simply brought CPI inflation back into line with the MPC’s forecast.
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