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IPPR - Falling inflation should encourage Bank of England to cut interest rates, says IPPR

Carsten Jung, senior economist at IPPR Reacting to yesterday’s inflation news

"Inflation temporarily falling close to the Bank of England’s target is good news, but wages are still catching up with post pandemic price increases. This is why it’s important that the Bank does not hamper the UK’s nascent recovery by leaving interest rates too high for too long. 

“The Bank has tightened the screws too much and this will hold back the economy and wage growth going forward. They recently admitted that inflation is falling faster than it originally thought, suggesting an earlier reversal in policy. 

“Looking back, it is clear that the government could have done more to shield people from inflation. Other countries like France and Japan were more proactive in easing price increases and did more to stop firms from amplifying inflation via shielding their profits. Especially on profits there are still actions it can take.”

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