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What should today's inflation figure mean for the BoE?

Journalist: Jon King, Daily Express Online

ended 20. September 2023

CPI inflation fell to 6.7% in August from 6.8% in July, the ONS has said.

The MPC will announce its decision on interest rates tomorrow.

Daily Express Online is looking for strong views of 2 or 3 paragraphs on the BoE's overall performance on inflation and what rate-setters should do next.

11 responses from the Newspage community

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Wes Wilkes
CEO at IronMarket Wealth
It's good to see inflation, in particular core inflation, moving in the right direction. However, you only have to look at the US to see how woefully behind the curve the Bank of England is in this inflationary fight. I would expect a very simple internal investigation on policy response would mean Andrew Bailey goes. It's been a catalogue of errors from over-stimulating the economy in its COVID response on which there is a bit of room given its unprecedented nature, however, to then attempt to tighten with rates but still print money AND when raising rates to do so in such a limp manner, this is why we still have nearly double the inflationary rate of that in the US and we're almost 19 months into the process and miles away from 2%.
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Bob Singh
Founder at Chess Mortgages
Today’s announcement wrong footed most expectations of a rise. Had it not been for the rise in fuel costs, the outcome would have been even better. This news and the other data coming out of late, paves the way for rates being held tomorrow. The Bank of England has been hinting for some time now that we are nearing the top of the cycle and that time has arrived. The money markets will react favourably to the news and mortgage rates should also start to head south as lender competition hots up for business in the final quarter.
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Darryl Dhoffer
Founder at The Mortgage Geezer
Three months and three months of declines. The Monetary Policy Committee should now slam the handbrake on future rises. I can still see a further increase of 0.25% tomorrow, and, if further rate increases follow in October, then the recession we have so far dodged will hit us like a wrecking ball.
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Amit Patel
Adviser at Trinity Finance
The performance of the Bank of England during the current cost of living crisis has been shambolic right from the start. On the back of the inflation data released this morning, the Monetary Policy Committee must now pause increasing the base rate. If it doesn't, it will show how out of touch it is with the UK economy.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
This data is great news for homeowners as interest rates might have peaked. Inflation was expected to increase this month, but both headline and core rates have reversed giving the Bank of England the reason to keep rates on hold as opposed to hike them again, as was expected. Although energy costs were higher, food and accommodation services pushed the overall basket down. This is exactly what Andrew Bailey and Sunak must have been wanting, as neither man could have enjoyed the pain they were inflicting on households. Savers would be wise to lock in rates now, as would those looking to purchase an annuity for retirement. Sterling has already plummeted by nearly 0.5% against the dollar and gilt rates have dropped. This is the pivot the market has been expecting, it’s just come a month early.
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Riz Malik
Independent Financial Adviser at R3 Wealth
The rate-setters should hit the pause button immediately. Virtually all the economic data that has come out since the last meeting has supported the argument that the trend of successive rate hikes needs to end. There is no advantage of having a low-inflation economy if, in the process, you have destroyed the prospects for economic growth.
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Katy Eatenton
Mortgage & Protection Specialist at Eatenton Finance
While it makes sense for the Bank of England to hold the base rate steady tomorrow, I think there will still be an increase as the MPC may put the reduction in inflation down to the increase in interest rates.
Hopefully I am proved wrong.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Inflation data is still improving but well off-target. In these situations, there is always pain for consumers and businesses. The Bank of England remains largely on track for reducing inflation to target levels whilst providing a softer landing, rather than completely shattering the economy. I would not be surprised to see another 0.25% added this week and anticipate rates to likely peak around 5.75%.
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Gary Bush
Financial Adviser at MortgageShop.com
The lower inflation figure, after a lot of recent fear that it would increase in August's stats, is fantastic news. This is further evidence that the Bank of England needs to pause its increases and give UK mortgage holders a break. It's their slow actions in the first place that put us in this position post-pandemic.
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Rob Gill
Managing Director at Altura Mortgage Finance
Today’s inflation figures are a welcome surprise and increase the chances that the Bank of England will hold fire on a 15th base rate hike. With the Bank having hinted previously we’re at or near the top of the current base rate rises, markets and mortgage borrowers will be waiting with bated breath to see if this is confirmed.
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Luke Thompson
Director at PAB Wealth Management
Inflation had been expected to increase in August so this news today will potentially buy the Bank of England some time. I still expect them to increase interest rates tomorrow. But, with this positive news on inflation and dependant on the inflation figures next month maybe there is some light at the end of the tunnel and the base rate could top out at 5.50%.

It is important to note though with these figures that fuel prices have increased sharply in recent weeks so there could be further challenges with regards to inflation if these increases in fuel prices continue.