UK inflation set to fall

That is according to a forecast in this FT report:

Inflation will fall back below the Bank of England's target after only one more rise in interest rates according to the latest forecast from the Ernst & Young Item Club.

Indeed, there were indications yesterday that past interest rate hikes are beginning to bite. From Reuters:

The British Bankers Association said underlying net mortgage lending rose by 5.1 billion pounds in March, the same as February's downwardly-revised figure, which was the weakest since April 2006...

Mortgage approvals figures from the Building Societies Association released at the same time also suggested demand may have peaked. Its data showed approvals for home loans totalled 4.830 billion pounds in March, the lowest since November...

BSA figures showed net mortgage lending reached its highest level in nearly 3-1/2 years in March, at 2.109 billion pounds.

The Council of Mortgage Lenders, meanwhile, said gross mortgage lending reached a record high for the month of March, at 31.260 billion pounds.

But unsecured lending fell by 200 million pounds in March, similar to the fall in February, the BBA said. Credit card lending accounted for half of this fall, with loans and overdrafts virtually unchanged, it said.

However, money supply growth picked up pace in March.

Provisional data showed M4 money supply rose 1.0 percent on the month -- its fastest increase since September. The annual rate held steady at 12.8 percent, wrongfooting many economists who had forecast a fall.