U.K. December CPI Hotter Than Expected

The Bank of England made it clear last year that it expected higher inflation rates in early 2010 given the increase in the VAT. However, with December’s CPI and core CPI both coming in hotter than expected – respectively, 2.9% vs 2.6% and 2.8% vs 2.3% – speculation is swirling about the BoE’s response. Bloomberg cites economists and analysts claiming that inflation may increase further and that rate hikes may start as early as May this year. (See “U.K. Inflation Rate Jumps Most on Record on Oil, Tax“)

The pound even spiked against the U.S. dollar on the CPI news before quickly selling off.


3 Comments on “U.K. December CPI Hotter Than Expected”

  1. Dr. Duru says:

    Thanks! Good stuff.

  2. Dr. Duru says:

    Oh yeah – and so continues the UK’s campaign against inflation expectations.

    Interesting how we see from Gordon Brown’s comments, the continued desire to keep interest rates low (and, similarly, a desire to keep the currency from appreciating)

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