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European Economic Data Preview: UK Consumer Price Index
Monday, 17 November 2008 23:06:57 GMT  |  Ilya Spivak, Currency Analyst
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Britain’s Consumer Price Index is expected to show the pace of price growth slowed to 0.1% in October, brining the annual inflation rate down to 4.8% having peaked at 5.2% in the preceding period, the highest in over 16 years. The Bank of England had moved forward with aggressive interest cuts before headline inflation reversed course, aiming to help restore confidence in shaky financial markets by slashing borrowing costs by a full 2% in the course of just a single month. The European Commission forecasts that inflation will slow to just 1.9% in 2009 from a cumulative 3.7% by the end of this year as a sluggish economy and falling commodities put the brakes on price growth. Mervyn King and company are expected to offer substantially more monetary stimulus in the near term, the overnight index swaps pricing in at least a 0.50% rate cut at the BOE’s next policy meeting and 100 basis points in total easing over the next 12 months.

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