The Bank of England must contend with a slowdown in Britain's economy but also stubborn inflation pressures when it considers whether to cut interest rates in early February as well as its message about the outlook for the rest of the year.

The disappointing retail data adds to the dim economic picture in the U.K. and to the challenges facing Finance Minister Rachel Reeves.

The Bank of England should move quickly to bring down interest rates given signs of a slowdown in Britain's economy, Alan Taylor, the BoE's most recently appointed interest rate setter, said on Wednesday.

Alan Taylor, the most recently appointed member of the Bank's monetary policy committee (MPC) said the UK is 'in the last half mile on inflation' and called for a pre-emptive cut

Latest figures show that UK inflation dropped last month, potentially affecting the Bank of England's interest rate decision next month. The Consumer Prices Index (CPI) rate fell from 2.6 per cent in November to 2.

A weaker UK economy is expected to prompt the Bank of England to accelerate interest rate cuts; Goldman Sachs predicts up to six reductions by the end of next year. The investment bank’s analysts think that as inflationary pressures continue and economic growth slows,

Markets are greatly underestimating the likelihood that the Bank of England will need to speed up the pace of interest rate cuts, Goldman Sachs has argued. They forecast that UK interest rates could drop to 3.