The bank also considers. Other measures, externalsuch as “core inflation” when deciding whether and how to change rates.
Core inflation does not include food or energy prices because they are very volatile, so may be a better indicator of long-term trends. The measure was 3.5 percent in November, which was 3.3 percent in October of the year.
In October, Bank Governor Andrew Bailey said: May be “a little more aggressive” in reducing borrowing costs.If inflation remains under control.
However, after the budget later this month, the bank predicted that the policies it included – eg Increase in National Insurance contributions paid by employers – Will increase inflation slightly as businesses pass on their increased costs through higher prices.
Announcing the November rate decision, Mr Bailey indicated that further cuts were likely to be gradual, adding: “We need to ensure that inflation stays close to target, so we are very cautious on interest rates. Can’t decrease too soon or too much.”
This was also predicted by the OECD think tank in December. Prices will last longer. Due to UK budget measures.
The bank is widely expected to keep rates at 4.75% at its next meeting on Thursday, December 19.