UK Producer Prices Climb Above Expectations

By David Schutz,

THE TAKEAWAY: UK factory output prices rise -> BoE increases asset purchase target by £50 billion -> Cable up about 20 points since news

January factory output prices in the UK rose at their fastest rate in nine months. The rise was fuels by increases in alcohol, petroleum products, and clothing. Factory prices rose 0.5% on the month, as opposed to the 0.1% predicted by economists.

Even so, companies are expected to have a hard time maintaining such prices as the Bank of England expected CPI to fall below its 2% target this year. The Bank of England yesterday decided to keep its

benchmark interest rate at its current ultralow level of 0.5%. Additionally, the BoE increased its asset purchase target by £50 billion to £325 billion, infusing the ailing economy with a hefty chunk of cash. The impact of these growth-inducing measures remains to be seen.

Cable was up by about 20 points after the price increase was reported.

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Original Article: http://www.dailyfx.com/forex/market_alert/2012/02/10/UK_Producer_Prices_Climb_Above_Expectations.html

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