Bank of England governor Andrew Bailey forecasts another big drop in inflation, boosting hopes for a...

The Bank of England's governor last night forecast another big drop in inflation after it fell to the lowest level since September 2021.

'I expect the next month's data will show quite a strong drop because of the impact of changes in energy pricing,' he said during a conference hosted by the Institute of International Finance. His optimism is certain to increase speculation that Britain could move ahead of the United States by cutting interest rates from the current level of 5.25 per cent sooner rather than later. Pictured: The Bank of England

Jeremy Hunt said the fall in inflation showed the 'plan is working... helping people's money go further' and adding to the boost to household finances from cuts in National Insurance. Falling inflation provides relief to millions of households after a painful period which saw it spike to a four-decade high of 11.1 per cent amid soaring energy and food prices.

And, crucially, wages are going up faster – by 6 per cent, according to figures published this week – which means working households will feel better off.The smaller than expected decline prompted traders to bet there was a less than 50/50 chance of a rate cut this August – pushing the likely timing to September.

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