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Towards the end of May a few members of the Fed started talking about the possibility of scaling back the size of its quantitative easing (QE) programme, which pushed stocks off their highs. However, the latest unemployment update from the US has revealed a 0.1% rise in the level of people out of work, so traders now believe that the Fed will not taper QE.
The latest consumer price index (CPI) and retail price index (RPI) figures from the UK both came in a touch higher than economists were expecting, which indicates that British consumer demand is creeping higher. If inflation becomes too high in the UK, we might see some pull-back in the stimulus package from the Bank of England – however, for now the inflation rate isn’t a concern.