Britain’s inflation rate cooled by more than anticipated in February, potentially offering the Bank of England leeway to ease the pace of interest rate hikes. Consumer prices rose 3.4% from a year earlier, slowing from 4% in January and marking the lowest inflation since September 2021, according to data released Wednesday by the Office for National Statistics.
The reading undershot economists’ forecast of 3.5% and the central bank’s expectations, providing a glimmer of optimism ahead of the BoE’s rate decision on Thursday. Core inflation, which strips out volatile food and energy costs, slowed to 4.5% from 5.1% the prior month, against projections of 4.6%.
Services inflation, a key metric monitored by policymakers, decelerated to 6.1% from 6.5%, aligning with the BoE’s projections last month. The figures buoyed hopes that the central bank could soon pause its aggressive tightening cycle, with markets pricing in a potential rate cut by August.
The British pound (GBPUSD) initially wobbled on the news before recovering to trade at $1.2721 by 7:30 a.m. GMT as investors evaluated the report’s implications.
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