U.K. Inflation rate lower than Forecast.

The U.K.’s inflation rate has stayed at 2.5 percent in March, less than economists forecast, giving the Bank of England scope to cut interest rates further.

The Bank of England has been given the necessary scope to further cut interest rates, as the Uk inflation rate has remained stable at 2.5 percent which is less than the forecasts predicting a rise of 2.6 percent.

The Office for National Statistics said today that this also matched the recording for February and are hopeful for a continuation.

The Office said that the Uk has exceeded the bank’s target rate of 2 percent in 6 months, as prices have been offset by the rising costs of fuel and higher energy bills.

Policy makers have said that the fact that the UK is experiencing slower economic growth will naturally keep prices from rising, which will allow another UK interest rated cut, following on from last week.

Although the pound has dropped to a record low against both the euro and the dollar, as well as the severity of the housing slump the signs of weaker economic activity levels are more of a fear against further cuts in interest rates than inflationary pressures.

However the Bank of England Governor Mervyn King is less optimistic and he has said that inflation may go past 3 percent this year, which will legally require him to write a letter of explanation to the government.

Chief U.K. Economist Malcolm Barr of JPMorgan Chase & Co has said today that he expects the next interest rate cut to be brought forward to May, with a further 0.5 percent knocked off the base rate.

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