Easing U.K. Inflation Opens Door for Additional QE from BoE
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GBP/USD– U.K. consumer prices slowed more than expected to 3.0% from 3.5%, with core prices slipping to 2.9% from 3.1%. A 2.3% drop in fuel & light costs led the deceleration, offsetting gains in clothing & footwear of 5.2%. Household services and alcohol added to the lower rate of inflation, but a look at the breakdown reveals increases in housing, tobacco, and food. Price growth is still evident and with inflation at the BoE’s 3.0% threshold, it will remain a concern. However, the central bank has forecasted that prices will in time return to their 2.0% target, and February’s decline adds weight to their argument, which opens the door for additional QE. To discuss this and other topics, please visit the GBP/USD forum.
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