UK Inflation Data Drops to 2.6%

UK CPI has come out lower than expectations at 2.6%, however staying at its high level but dropping below the BoE prediction for 2017 at 2.7%. The number this morning had significant meaning due to the discussion recently around possible rate hikes in the UK. At the last MPC meeting the committee voted 5-2 for keeping rates on hold, with two dissenters, the most since 2011.

There are two points to this however, firstly in my opinion the rates should never have been cut in the aftermath to of the EU referendum back in June last year. Secondly, we must look at a number of factors high inflation readings are currently being combined with stagnant wage growth, and record high household debt. For me the mistake was made previously and moving rates now would only force many into tough situations on debt repayments.

The UK CPI reading has shown that inflation is still high when compared to the likes of the Eurozone and the US, and remains a problem. With Brexit negotiations continuing the government want to see the best possible standards for the electorate, and high inflation, and low wages are not the ideal situation.

Sterling yet again had its move prior to the numbers falling back from its highs hit overnight and extended this morning. After the number the move was extended back down to test 1.3020 on the downside.

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