Inflation falls giving rise to interest rate reduction speculation

Inflation falls giving rise to interest rate reduction speculation

The inflation rate of United Kingdom has fallen to the lowest level in over three years in the month of December as it increased the speculations that the interest rates may be cut. The rate has seen a drop to the level of 1.3% in the previous month which is down from the month of November where it was 1.5%. This was in part due to the price of clothes of women and the costs of hotel rooms.

The rates of inflation for the month of December were lowest since the month of November in the year 2016.

The analysts are saying that this has raised the chances of there being a rate cut with the rates of inflation below the target of 2% set by Bank of England.

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Economists have said that a soft level of data in UK for the month of December in United Kingdom has left the door open of a rate cut by the central bank on the 30th of January.

The main interest rate of the Bank has been used by the banks and more lenders who are setting the borrowing costs.

This is going to affect each and everything from the mortgages to the loans of business and has a major effect on the individual and company finances.

The traders in the city who are spending their lives trying to anticipate the moves of the Bank with respect to rates of interest are convinced that the Bank will be cutting the rates when they have a meeting later in the month. Market indicators suggest a chance of 60% for the bank to cut its rate of interest later in the month.

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