The pound dropped to 1.2400 as a report showed UK rate of inflation unexpectedly slowed in October. Annual consumer-price index was 0.9% last month, compared with 1% in September. Despite October's decline in inflation rate Mark Carney, the BOE's governor, still expects inflation to rise saying that:
1 clothing and footwear are very volatile components
2 inflation should rise due to the recent fall in GBP
3 Producer Price Index went in line with expectations and was consistent with weaker GBP passing through into CPI
4 BOE has limits to tolerance for above-target CPI
Earlier this month BOE’s officials refused to recourse to additional easening and shifted to a neutral policy stance instead. The pound rose as soon as BOE decided to keep its interest rate on hold.
1 clothing and footwear are very volatile components
2 inflation should rise due to the recent fall in GBP
3 Producer Price Index went in line with expectations and was consistent with weaker GBP passing through into CPI
4 BOE has limits to tolerance for above-target CPI
Earlier this month BOE’s officials refused to recourse to additional easening and shifted to a neutral policy stance instead. The pound rose as soon as BOE decided to keep its interest rate on hold.
(Discuss) UK inflation reports and Carney’s testimony
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