Negative interest rate debate becomes 'very real' as UK inflation plunges to 0.8%

Lowest CPI reading since August 2016

Mike Sheen
Bank of England governor Andrew Bailey

Bank of England governor Andrew Bailey

The debate concerning negative interests in the UK has now become “very real” after the UK CPI 12-month inflation rate dipped to 0.8% in April from 1.5% in March, recording its lowest reading since August 2016 and putting it on course to hitting 0% in the coming months, according to market commentators.

Office for National Statistics (ONS) figures released this morning (20 May) show that CPIH, which also measures owner occupiers' housing costs, was 0.9%, down from 1.5% a month earlier, as the impact of lockdown affects goods prices across the economy. BoE cuts rates to 0.1% in latest pandemic response The largest drag on the 12-month rate, according to the ONS, was a fall in energy and fuel pump prices largely owing to the collapse in oil prices, which resulted in a 0.35 percentage point reduction in the rate from the housing, water, electricity, gas and other fuels sector. Meanwh...

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