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On Wednesday EU CPI came at the expected 2.1%, which confirmed the economists’ expectations that the ECB will unwind the asset purchase program planned later in 2018. The core inflation including energy, food, tobacco and alcohol prices rose to an annual rate of 0.9%. The target inflation rate of European Central Bank is close to, but just below 2% and it is expected that on the meeting next week, ECB will keep the interest rates on hold.
We have also received the reading from the UK, where the inflation dropped to a three month low in September. The CPI rose to an annual rate of 2.4% in the previous month, which was below the consensus for a 2.6% raise. The core CPI excluding energy, food, tobacco and alcohol costs rose by 1.9% in September, while the forecasts were for a raise of 2.0% and compared to the 2.1% in August. The release affected the pound which had extended the losses, being affected already by the Brexit negotiations.
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