The Bank of England must contend with a slowdown in Britain's economy but also stubborn inflation pressures when it considers whether to cut interest rates in early February as well as its message about the outlook for the rest of the year.

The Bank of England's Monetary Policy Committee (MPC) uses interest rates to put a brake on the nation's spending.

UK inflation unexpectedly fell to 2.5 per cent in December, sparking increased expectations of an interest rate cut by the Bank of England next month. The surprise decline from November's 2.6 per cent marked the first drop in inflation for three months.

Inflation in the U.K. unexpectedly fell in December, a move that will likely fuel pressure on the Bank of England to cut interest rates again next month

Wage growth increased by 3.4% after taking into account inflation, driven by strong increases in the private sector.

However, it means the Consumer Prices Index (CPI) - the main measure of inflation - remains stubbornly above the Bank of England’s target of 2%. The Office for National Statistics (ONS ...

The fall in the headline rate of inflation from 2.6 percent to 2.5 percent was unexpected and positive news for the Chancellor Rachel Reeves.

The Bank of England will cut interest rates four times this year to support a flat-lining economy, economists polled by Reuters said, but they added that risks to inflation are to the upside, suggesting policymakers may end up doing less.

Core inflation, which strips out the direct impact of volatile energy and food prices is now at a four-year low, having dropped to 3.2% in December from 3.5%. Services inflation is at a two-year low of 4.4% after a chunky fall from 5%. This is the real positive news.

Alan Taylor, the most recently appointed member of the Bank's monetary policy committee (MPC) said the UK is 'in the last half mile on inflation' and called for a pre-emptive cut

Inflation is stuck above the BoE's 2% target and looks set to rise further while the economy has stagnated since the middle of 2024, offering conflicting signals for the central bank's rate-setters.

Read Less Inflation edged down to an annual rate of 2.5% in December, from 2.6% the month before, providing a glimmer of hope that the Bank of England might cut interest rates at some point in the ...