The drop in inflation announced yesterday has paved the way for the Bank of England to go through with another round of quantitative easing (QE) as early as next month, reports suggest.
As announced yesterday, the Consumer Prices Index fell from 3% in April to 2.8% in May, the lowest level since November 2009. The Retail Prices Index also dipped from 3.5% to 3.1%, according to the Office for National Statistics.
The Daily Telegraph reported that economists said the drop in inflation gave the Bank of England room to restart QE in July.
Minutes to be released this morning are expected to show growing support for another round of QE among policymakers, the report added.
Investec UK economist Philip Shaw told the Telegraph: "With inflation coming dow sharply over the past could of months, the economic data disappointing and global uncertainties rising, there doesn't appear to be much cause to hold back."
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