Investing.com - The annual rate of change in Britain's consumer price index rose unexpectedly in February, but remained below the Bank of England’s inflation target, allowing the central bank leeway to sit tight as it awaits further clarity over Brexit.
U.K. CPI increased 1.9% from the year before, surprising economists who had forecast it to hold steady at January’s reading of 1.8%, which had been its lowest since December 2016.
Although current levels of inflation, coupled with the political and economic uncertainty surrounding the U.K.’s departure from the European Union, underline the case for the BoE to leave monetary policy unchanged on Thursday, a solid labor market is illustrating that there is a case for raising them, too.
Jobs data released this week showed not only the strongest job creation since 2015 in January but confirmed that wages rose at their fastest pace since the financial crisis.
ING chief international economist James Knightley referred to the jobs data as “astonishingly strong” on Tuesday. “If the government gets a long Brexit extension, a Bank of England rate hike is clearly on the table for the summer,” he said.