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UK Stays Away From Inflation Targets

UK Stays Away From Inflation Targets

Today the markets are very firmly focussed on the UK and the CPI figures which are released this morning. These inflation figures are expected to come in at 1.2% which is unchanged from last month’s figure which was a five year low. Expectations are that prices for the service sector are falling whilst the manufacturing prices are rising at a particularly slow rate.

These figures are expected to further confirm that there shall be no interest rate hike for the foreseeable future. This is a huge change from those hazy days of summer when the Bank of England were winning the rate hike race and were expected to implement the first interest rate rise by now. However, due to issues with the global economy, this optimism soon tailed off and the UK certainly faces huge disinflationary forces from Europe.

This could all be good news for David Cameron as with a general election pencilled in for 7th May next year, it is extremely unlikely that anything will happen before then. The markets hate political uncertainty of any sort so this is certainly a topic we will be revisiting in the next 6 months.

We also have PPI out of the UK today, ZEW economic sentiment out of Germany and PPI out of the US.

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