Expectations that interest rates will be kept at their present record low of 0.5% well into next year hardened yesterday as inflation fell below its 2% target last month for the first time in almost two years.

Concern that price pressures in Britain might be proving stubbornly persistent in spite of the recession faded as inflation on the consumer prices index, the Bank of England’s benchmark, fell to an annual 1.8% in June, from 2.2% in May, reaching its lowest since September 2007.

The Times