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Labour's shadow chancellor Ed Balls has said he hopes that the recent signs that pay is rising faster than inflation could signal the end of the "cost of living crisis".
When asked by the BBC if the recent announcement by the Bank of England marked "the beginning of the end for the cost of living crisis", Mr Balls said:
Projections in the Bank of England's quarterly inflation report are likely to cement expectations that interest rates will not rise until well into next year.
After the cuts in growth and inflation projections the BoE is expected to leave the interest rate at the long-term low of 0.5%.
"What really matters is the broad process of monetary policy, not a specific date for the first interest rate rise", Governor Mark Carney said
The Bank of England also said its slightly lower expectations for gross domestic product (GDP) growth reflected the weaker global outlook - amid stagnation in the eurozone and slowing growth in China.
Private sector domestic demand was also seeing a "softer profile" despite the recent push back in expectations for an interest rate hike.
The report projected solid growth in consumption as households reduce savings but that there remained a risk that they would not be willing to do so "particularly if concerns around the economic outlook build".
Meanwhile, recent weakness in the housing market was bearing down on investment in the sector.
Business investment, though still strong, would be slower than had been previously expected "reflecting the weaker and more uncertain global backdrop".
The Bank of England expects the consumer prices inflation (CPI) rate to fall further in coming months away from its 2% target before climbing back towards that level in three years' time.
In a press conference Bank of England Governor Mark Carney said: "Although they are not permanent, the forces subduing inflation today are likely to persist for some time."
While low inflation eases the strain on household budgets, policy makers would be concerned were it to plunge too sharply as has happened in Europe where there are fears of a damaging deflationary spiral.
The Bank's projections for CPI at the start of next year are sharply lower than previously, with a CPI rate of 1% pencilled in for the first quarter compared with 1.9% projected at its previous inflation report in August.
It expects that monthly inflation will probably fall temporarily below 1% in the next six months and remain close to that level for most of next 2015 before heading close to its 2% target in three years' time.
The Bank of England today sounded a stark warning over the threat to UK growth of a "moribund" eurozone economy as it trimmed its growth forecast for the UK and predicted a 1% fall in inflation over the next six months.
Governor Mark Carney said: "A spectre is haunting Europe - the spectre of economic stagnation, with growth disappointing again and confidence falling back."
He said it was more likely than not that he would have to write to the Chancellor in the next six months to explain why inflation had fallen below 1%.
The Bank cut its UK gross domestic product (GDP) forecast for next year from 3% to 2.9%, although it still expects 3.5% growth for this year.
However, it predicts an end to the six-year squeeze on living standards, with real terms wage growth rising from around zero currently to reach about 2% by the end of next year. Pay has been lagging behind inflation since 2008.
Mark Carney, the Governor of the Bank of England (BoE) has said that inflation is more than likely to fall below 1% over the next six months. Its growth expectations for next year have been cut from 3% to 2.9%.
A record number of people are in work after another huge fall in unemployment, new figures have shown.
Employment increased by 112,000 in the latest quarter to 30.7 million, the highest since records began in 1971, the Office for National Statistics (ONS) reported.
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