INTEREST RATES looked set to fall further on both sides of the Atlantic yesterday as inflation in Britain fell to a record low and the United States' top banker gave a gloomy view of the American economy.
Business leaders and trade unions called on the Bank of England to cut rates after inflation fell to a 25-year low in January. The annual rate excluding mortgage payments dropped to 1.8 per cent - the lowest since modern records began in 1976. The headline rate dipped to 2.7 from 2.9 per cent.
This is the 22nd month in a row that underlying inflation has undershot the Government's target of 2.5 per cent.
Further proof of the UK's low inflation came as figures showed the average rate for 2000 was the lowest in the EU - the first time this has occurred since records began in 1990. The main factor in January's performance was a 4.1 per cent drop in the price of oil and petrol.
Roger Lyons, head of the MSF, a white-collar union, said: "A big cut in interest rates next month is now essential."
The Confederation of British Industry urged Gordon Brown, the Chancellor of the Exchequer, not to jeopardise future rate reductions with inflationary tax cuts in the Budget. "[Rate cuts] will depend on whether or not the Chancellor delivers a cautious Budget in March," said Sudhir …