"This had the potential to prolong the period for which CPI inflation would remain below the target and exacerbate the risk that lower expectations of inflation might become more persistent"
-BoE meeting minutes
While the claimant count rate continued to decline for the 28th straight month in January, the UK unemployment rate remained unchanged at post-crisis low. Unemployment in Britain dropped 102,000 to 1.86 million in the three months through January, the Office for National Statistics reported. The number of people seeking unemployment benefits fell by 31,000, shy of analysts' expectations for a 32,500 drop. However, the jobless rate held at 5.7% in January, disappointing market prediction for a decline to 5.6%. Average weekly earnings, including bonuses, increased 1.8%, down from 2.1% growth in the preceding month. Excluding bonuses, average weekly wages climbed by 1.6%, compared with 1.7% growth recorded in December.
Meanwhile, the Bank of England saw a risk that a strong Pound could leave inflation below target for longer, according to minutes of March meeting. Diverging monetary policy trends as well as stronger UK economic growth prospects compared to the Euro zone would continue to support the British Pound in the near term. While the Pound has lost against the US Dollar recently, versus the single currency it has climbed to its highest level since the start of the financial crisis. Additionally, policy makers voted unanimously on keeping interest rates on hold at all-time low 0.5%.
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