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UK CPI Falls Sharply to 14-Month Low, Remains in Line with Expectations

UK CPI Falls Sharply to 14-Month Low, Remains in Line with Expectations

David Schutz,

THE TAKEAWAY: UK inflation drops -> BoE places first priority on economic growth -> Cable dips slightly on the news

Inflation in the UK dropped by half a percentage point in January from the month before, the UK statistics office said today. Inflation rose by 3.6% on the year, which was a softer reading than the previous 4.2%. The data were in line with the median forecast by economists.

Although the reading showed a drop in from previous numbers, inflation is still well above the BoE’s target rate of 2%. BoE Governor King is expected to write a letter to Exchequer Chancellor Osborne regarding the developments. The BoE last week expanded its quantitative easing program by 50 billion pounds in a bid to increase growth.

Cable sold off slightly directly after today’s CPI reading, but on the whole markets remained relatively unaffected bv the as-expected developments.

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