BoE Governor Andrew Bailey said two months of decline in headline inflation is “the beginning of a sign that a corner has been turned.” He said: “What we think is the most likely outcome is that it will fall quite rapidly this year, probably starting in the late spring and that has a lot to do with energy pricing.
On the outlook for the base rate, he said: “We don’t target a particular peak”. Market curve was out of line back in November, because of UK risk premium in there following the events of September and October
“If you go back to the height of that period, the peak of what the market thought we were going to get to was over 6%, but the time we did our forecast in November it was 5.2%, it is now down to 4.5%. Now I am not endorsing 4.5%, but what you may have noticed in December is that we did not include the comment that we made in November about the market being in our view rather out of line,” he said.
