The dip in CPI inflation from 3.0% in January to 2.8% in February is a bit of a red herring as inflation will probably be back above 3.0% in April and around 3.5% by September. That and the risk of spillovers into wages will probably mean the Bank of England will press pause on interest rate cuts at some point in the coming months. If that were to prompt a further rise in market rate expectations, today may not be the only time this year the Chancellor has to tighten fiscal policy to compensate for higher borrowing costs.
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