Wednesday, 24 March 2010

UK inflation slows, US existing home sales fall

Reuters reports that UK inflation has slowed.

British annual inflation slowed last month for the first time since September, boosting hopes that price pressures have peaked and cementing expectations that interest rate rises remain a long way off.

The Office for National Statistics said consumer price inflation eased to 3.0 percent in February from January's 14-month high of 3.5 percent. Analysts had expected a smaller drop to 3.1 percent.

Meanwhile, Fed officials don't think that inflation will be a near-term concern for the US. Bloomberg reports Janet Yellen's speech on Tuesday:

Federal Reserve Bank of San Francisco President Janet Yellen said it’s too soon to raise interest rates, and she discounted concerns record budget deficits might fuel inflation.

“I don’t believe this is yet the time to be tightening monetary policy,” Yellen said in the text of a speech today in Los Angeles. “But as recovery takes firm root and economic output moves toward its potential, a time will come when it is appropriate to boost short-term interest rates.”

Tuesday's economic data indicate that the recovery may take some time to take "firm root". Again from Bloomberg:

Sales of existing U.S. homes fell in February for a third month, and the number of properties on the market climbed by the most in almost two years, casting a pall over the prospects for a recovery.

Purchases dropped 0.6 percent to a 5.02 million annual rate, the lowest level in eight months, figures from the National Association of Realtors showed today in Washington. There were 3.59 million houses for sale, a 312,000 increase from January that marked the biggest gain since April 2008.

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