Focus on inflation after rates held

Bank of England: Inflation prediction. Picture: Getty
Bank of England: Inflation prediction. Picture: Getty
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INFLATION is predicted to start rising again later this year as the effects of the dramatic fall in oil prices start to lessen.

Economists at Barclays said an upturn in the consumer prices index (CPI), currently well below target at 0.5 per cent, will put the Bank of England “in a favourable position” to discuss hiking interest rates, which were kept on hold yesterday.

The Bank, which will publish its latest inflation report next Thursday, has left rates at 0.5 per cent for six years and members of its monetary policy committee have said there is a “roughly even” chance of CPI turning negative in the first half of 2015 due to falling petrol costs.

However, Barclays said inflation could later rise towards 1.5 per cent as the year-on-year impact of lower prices eases off.