Add weaker inflation to the reasons why Mark Carney is having a tough job convincing investors to bring forward their bets on Bank of England interest-rate increases.
A report Tuesday showed consumer prices increased 2.6 percent in July, less than the 2.7 percent rate forecast by economists. The pound fell after the report, as it did two weeks ago when the governor’s message that investors are underestimating the path of rate increases was drowned out by cuts to the BOE’s growth forecast and his economic concerns about Brexit.
The inflation data provide further evidence of the difficulty the BOE faces in preparing the ground for higher borrowing costs against the backdrop of worsening economic indicators and continued uncertainty about Britain’s exit from the European Union. Economists in a Bloomberg survey this month cut their forecasts for growth this year and next.