The inflation rate for the UK fell to below the Bank of England’s target of 2% for the first time since November 2009. Inflation has overshot the 2% target since then, which had been a concern for analysts, who believed the central bank would need to raise interest rates to combat the rise. Mark Carney has now released “Forward Guidance 2.0,” which is focused on the output gap, which last year the BoE said was “unobservable” and “difficult to explain”.
The consumer price index for January fell to 1.9%, in December inflation grew by 2%.
UK House Prices
There has been a concern, that the historically low base interest rate, combined with the governments flagship lending scheme and a lack of supply is creating a housing bubble. The latest release from the ONS showed that residential property prices in the U.K. increased at a faster pace in December, but the growth rate missed economists' forecast.
The average UK house price reached £250,000 in December 2013 - ONS— Joe Bond (@Joe_Trading) February 18, 2014
Following the economic releases GBP initially fell against the greenback before finding some support.