Inflation figures unlikely to prevent interest rate cut if growth takes a turn

BRITISH inflation remained above its 2.5% target for the third month in a row in January, but this is unlikely to prevent the Bank of England cutting interest rates again if growth takes a turn for the worse.

The Office for National Statistics said that retail prices, excluding the cost of home loans, RPIX, fell by 0.1% on the month, keeping the annual rate at 2.7%, the same as in December but higher than market expectations of 2.6%.

Financial markets barely flinched. Interest rate futures edged lower initially as dealers bet that at the margin the higher than expected figures reduced the chances of another interest rate cut but soon recouped their losses.