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UK Consumer Price Index - Economic Data Preview
Tuesday, 20 January 2009 00:01:47 GMT  |  Ilya Spivak, Currency Analyst
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The UK Consumer Price Index is set to shrink for the third consecutive month in December to bring the annualized inflation rate to 2.6%, the lowest in over 2 years. Lower commodity prices and sluggish economic activity have seen the pace of price growth slow considerably since peaking at 5.2% in September. Earlier this month, the Bank of England cut interest rates by 50 basis points to 1.50%, the lowest since the bank’s creation in 1694. Minutes from the meeting are set to be released later this week, with DailyFX Strategist Terri Belkas noting that if “the MPC seems to hold a more dovish stance, the British pound could pull back sharply.” Trading in overnight index swaps points to at least another 25 basis points in easing by February while bond yield forecasts see rates falling as low 0.50% through the second quarter.

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