"Market indicators have not moved. They didn't move today and they haven't moved over the course of these energy price increases."
- Mark Carney, Bank of England Governor
After months of strong data from the U.K., analysts expressed their views the economy would hit the 7% threshold in the unemployment rate significantly earlier, as the pace of expansion accelerates. Nevertheless, Monday's report showed it is unlikely to happen, as companies are still reluctant to increase hiring, while Tuesday's official data showed inflation dropped to the lowest level for more than a year in October. Consumer Price Index, which is the most important inflation data, stood at 2.2% last month, from 2.7% in September, falling below analysts' predictions for a 2.5% figure. The main downside effect came from transport costs, motor fuels and air fares, as well as university tuition fees. Soon after the report the Pound hit the lowest level in two months against the greenback, loosing almost 0.8%. Since October 23 the cable lost more than 2%, after hitting the highest level in month at 1.6256.
Despite a slowdown, this data offers reassurance for policymakers that they have ample time to allow the domestic economy to gain the momentum before the BoE considers raising interest rates. Britain's officials have pledges to stay pat on the monetary policy as long as inflation expectations remain anchored to the official target of 2%. Inflation has been hovering above the 2% target since December 2009. It contrasts with CPI in the neighbouring Eurozone, which is struggling from below-trend inflation.
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