The Bank of England cut its forecast for inflation, saying there is a good chance the country may see falling prices this year and that it is good news for the consumers.
While Governor Mark Carney acknowledged that the inflation rate is "more likely than not to turn negative at some point in the spring," he says slowing inflation is largely due to falling oil prices and a supermarket price war that will put more money in consumers' pockets.
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If this trend becomes more widespread, raising the specter of long-term deflation that could threaten economic growth, the bank is ready to act.
Carney said Thursday in the bank's quarterly inflation forecast that this could include cutting interest rates from 0.5 percent and pumping more money into the economy.