Belfast Telegraph

Small fall a chink of light for interest rates

Company results in the UK and Ireland are generally released at 7am on weekday mornings; economic indicators at 9.30am.

Yesterday, for two and half hours we were digesting more banking woes and expecting the worst from UK inflation figures.

But for once, we were in for a surprise, and a positive one at that.

While 0.4% may not sound like much, the drop in the headline inflation figure to 4% has been welcomed with open arms by interest rate bears.

It's still well above the Bank of England's target inflation rate of 2% but less than the unchanged 4.4% many had been expecting and in this game, expectation is everything.

At 9.29am it was a given that Mervyn King would be announcing a interest rate hike next month but at 9.31am the economist community weren't so sure.

They reckon the pressure's been taken off the Monetary Policy Committee and a rate hike now isn't likely until the summer.

If that proves to be the case, and let's hope it does, then that 0.4% suddenly becomes very important.

Of course anecdotal evidence, based on how much it costs me to fill up the old jalopy with fuel and buy a basket of highly nutritious food, suggests prices are still rising for the everyday person on the street.

For the wider economy, particularly the sensitive Northern Ireland economy, a hike in interest rates at a time when we're already struggling would be a difficult pill to swallow, so let's hope the economists are now right.