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flag UK budget cuts inflation by 0.4–0.5% by mid-2026, but rate cuts will be gradual.

flag UK government budget measures, including energy bill support and a rail fare freeze, are projected to cut inflation by 0.4 to 0.5 percentage points by Q2 2026, according to Bank of England officials. flag The measures, effective from April 2025, aim to lower household costs, though ending the fuel duty freeze and introducing an electric vehicle charge may add 0.1 percentage points to inflation in the following two years. flag Inflation, which peaked at 3.8% in late 2024, is expected to continue falling toward the 2% target. flag Officials note modest short-term GDP gains from increased spending but stress cautious, gradual interest rate reductions, with the Bank’s Monetary Policy Committee set to decide on rate cuts next week.

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