Falsely inflated hopes

17 March 2010 By Ian Campbell

Lower jobless claims and Bank of England concern on inflation gave sterling a brief boost. But there are less people in work, and inflation reflects the pound’s fall rather than recovery. The pain may get worse when fiscal cuts come, but devaluation is helping the UK rebalance.

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Context News

Unemployment in the UK fell to 2.45 million for the three months to January, down 33,000 on the figure for the previous three months, the national statistics office said on March 17.

The number of people claiming jobless benefits fell by 32,300 to 1.59 million in February. However, the number of people in work fell in the quarter, by 54,000 to 28.86 million. The number of inactive people of working age increased by 149,000 during the quarter to reach a record high of 8.16 million.

The minutes of the Bank of England monetary policy meeting of March 34 showed that all nine members of the monetary policy committee voted to keep interest rates and the level of quantitative easing unchanged.

Some members of the committee thought that inflation risks had risen. The bank said that if the recent further depreciation of sterling persisted, it "was likely to put additional upwards pressure on inflation over the next few quarters." As a result inflation might remain "well above the target over the months ahead."

The pound jumped immediately after today's release of the jobs figures and the bank minutes, rising to near threeweek high against the dollar of $1.535.

Context News

Unemployment in the UK fell to 2.45 million for the three months to January, down 33,000 on the figure for the previous three months, the national statistics office said on March 17.

The pound jumped immediately after today's release of the jobs figures and the bank minutes, rising to near threeweek high against the dollar of $1.535.

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