Odds of an increase in UK interest rates on Thursday fall below 50%, after inflation rate dropped unexpectedly in August to an 18-month low

Underlying measures of inflation weakened more sharply, opening up the possibility that BoE Governor Andrew Bailey and his Monetary Policy Committee (MPC) colleagues will keep rates on hold on Thursday after 14 back-to-back increases since December 2021.

Inflation in Britain fell unexpectedly in August to its lowest level since the start of Russia’s invasion of Ukraine

Expectations changed after inflation, which is the rate prices rise at, was revealed to have fallen unexpectedly to 6.7% in the year to August. The Bank of England, which sets rates, will reveal its decision at midday. Any rise would mean higher interest rates on some mortgages and loans, but also higher savings rates.

Slowing food prices helped drive a surprise fall in inflation in August, with the cost of living now at its lowest level in a year and a half. Inflation, which measures how prices change over time, fell to 6.7% in the year to August, down from 6.8% in July, official figures show.

Britain's high inflation rate unexpectedly fell, prompting investors to raise bets on the Bank of England pausing its long run of interest rates hikes as soon as Thursday. Official data showed the consumer price index dropped to 6.

Odds of an increase in UK interest rates on Thursday fall below 50%, after inflation rate dropped unexpectedly in August to an 18-month low

The British Pound (GBP) fell against the Euro (EUR) and the U.S. Dollar (USD) on Wednesday, September 20, 2023, following a sudden decline in the U.K.'s CPI inflation to 6.7% in August, from 6.8% in July.