BoE 'vindicated' on rate pause as inflation rises

Dangers remain

The Bank of England's decision to hold interest rates at its last Monetary Policy Committee meeting at 0.75% has been "vindicated" by the rise in inflation revealed by the Office of National Statistics (ONS) today (19 February), but questions remain for the central bank’s future policy path.

UK CPI rose to 1.8% in January, up from 1.4% in the previous month, closing in on the BoE's long-term inflation target of 2%. Meanwhile the 12-month CPIH rate, which includes owner occupiers' housing costs, rose to 1.8% from 1.3% in the previous month. The largest contribution to the CPIH 12-month inflation rate in January 2020 came from housing, water, electricity, gas and other fuels, followed by transport. Meanwhile, the largest detractors from the rate were in furniture and household goods, followed by food and non-alcoholic beverages. Market reaction to the figures was mute...