Bank of England interest rate decision on knife edge after inflation fall

Markets revise forecasts, raising chance interest rates may be kept on hold for first time in two years

The Bank of England is facing a knife-edge decision on interest rates after an unexpected fall in UK inflation last month, as financial markets bet the central bank could leave borrowing costs unchanged for the first time in almost two years.

In a crunch week for the economy, the August figures from the Office for National Statistics (ONS) on Wednesday saw financial markets revise their forecasts, raising the chance of the central bank keeping interest rates on hold on Thursday from 20% to more than 50%.