Deputy Governor of the Bank of England Ben Broadbent has confirmed that the recent drop in oil prices and subsequent impact on the economy means that British inflation is likely to remain below 1 percent for the rest of this year.
This will also make will a rate rise in the near future unlikely.
“The drop has been a pretty protracted one…and will keep inflation below 1 percent…throughout this year,” Broadbent said in an interview on BBC Radio.
However, he went on to say that inflation looks set to rise in 2017:
“Indeed we expect it to go back to target, if not a little above, in two to three years.”
Further data was released today regarding the jobs market, which also hampered expectations that the Bank of England will raise rates this year. According to the Recruitment and Employment Confederation, British starting salaries rose last month at the slowest pace since October 2013, adding to concerns about the pace of wage growth in the UK.
Yesterday the Bank of England cut its forecast for wage growth, another key figure impacting on when interest rates will be raised; wage growth slowed in the three months to November to its lowest level since 2006.
These sets of data are just the latest in an string of economic news that points to another slowdown in the global economy. US jobs data released later today will be a key indicator as to the health of employment in the world’s largest economy.