The Bank of England suggested that there won’t be an interest rate hike this year, pushing expectations of a rise back to 2016, as inflation is expected to fall below zero in coming months.
“Market interest rates imply that Bank Rate is expected to increase from mid-2016 to a little over 1 percent in three years’ time, materially lower than had been implied three months ago,” according to the central bank’s Inflation Report, published Thursday.
In an open letter to the Chancellor of the Exchequer, also published Thursday, Bank of England Governor Mark Carney said the current period of falling prices was “temporary” and a “fundamentally distinct phenomenon from deflation.”
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