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"For the first time in a long time it seems reasonable to expect the hopes and dreams of the holiday season to be fulfilled," says Bank of England Governor Mark Carney in a NY speech. "The Ghost of Christmas Present is a cheerful spirit. As uncertainty diminishes, credit conditions improve and balance sheet repair progresses, monetary policy is gaining traction."
Not buying the "secular stagnation" thesis of many, Carney says there's little reason to believe developed economies can't recover to past growth rates.
The pound continues to head higher, now up a whopping 16 handles since Carney took the BOE reins in July and has been unexpectedly hawkish since.
Cable is buying $1.6406 at the moment. Above $1.70 would take it back to summer-2008 levels.
The U.K. is the outlier in Europe, the FTSE 100 sliding 1.5% after the BOE upgrades its employment outlook, suggesting a rate hike maybe as soon as 2015. A broad European gauge, the Stoxx 50 (FEZ) fell just 0.5%.
The pound (FXB) is ahead by 0.8% to $1.6026, and getting near the point where the U.K. economy has screamed "uncle" several times over the past 4 years. Was it just 4 months ago when sterling could have been purchased for $1.48 as traders expected Mark Carney to initiate a new easing campaign after taking the reins at the Bank of England? Those expecting Janet Yellen to out-dove Ben Bernanke might well pay heed.
The U.K. unemployment rate falls to 7.6% in the three months to September, data shows. That's the lowest rate since 2009 and is largely in-line with economists' expectations.
For Q3, the jobless total fell by 48K to 2.47M, while payrolls jumped 177K.
The BOE has promised to keep interest rates at 0.5% until the jobless rate falls to 7%.
Previously, the central bank said it could be mid-2016 before the employment threshold is hit, but some expect that forecast to be pulled forward today when the BOE delivers its quarterly inflation report.
U.K. CPI slowed to +0.1% on month in October from +0.4% in September and was below consensus of +0.3%.
On year, inflation dropped to 2.2% from 2.7% and vs forecasts of 2.5%.
Core CPI +1.7%.
The drop in annual overall inflation moves the metric closer to the Bank of England's target of 2%. "Low inflation should allow monetary policy to continue to support a strong economic recovery in 2014-15," says Citigroup economist Michael Saunders.
Lower transport costs, including for motor fuels and air fares, and university tuition fees, provided the largest downward pressure on prices.
Factory output prices (PPI) fell 0.3% on month, the largest decline since June 2012.
The pound slides vs the dollar and is -0.7% at $1.5872, while the FTSE 100 is -0.2%. (PR)