The Bank of England’s Monetary Policy Committee (MPC) voted to keep the base interest rate and the stock of assets purchased under the quantitative easing programme unchanged in March at 0.5% and £375bn respectively. This marks six full years since interest rates have changed.

The UK economy moved closer to deflation in January, with the headline rate of inflation, as measured by the Consumer Price Index (CPI), falling to just 0.3%. Inflation looks set to fall further in the coming months as cuts to the price of household gas tariffs, introduced by most major providers towards the end of February, feed into the inflation figures. Cebr continues to expect that these pressures will take consumer price inflation into negative territory in March, following the Eurozone and US where inflation has already dropped below zero.

Fortunately for the UK economy it continues to look unlikely that weak or negative inflation will become entrenched. In fact the falling price of fuel has helped to boost the UK economy. This week’s PMI data showed that the British economy has started 2015 on a strong footing and in particular that both the service and manufacturing sectors of the economy have continued to add jobs.