Bank leaves door open for rate cut | Reuters

Read More Here: "LONDON (Reuters) - The Bank of England raised hopes of an interest rate cut before year-end on Wednesday as it forecast the current record-breaking spike in inflation would reverse sharply as the economy grinds to a halt.

The market reaction was swift. Interest rate futures jumped more than 20 ticks and the pound fell to near two-year lows against the dollar as investors priced in an 80 percent chance of a rate cut by December and further easing after that.

The central bank's new quarterly forecasts showed inflation -- already running at more than double the 2 percent target and the highest since the series began in 1997 -- would leap to around 5 percent this year.

But thereafter, it would fall dramatically as the effect of rising food and fuel prices wane and economic growth dried up."