Prices on the consumer level rose 0.7% in February after falling 0.7% the previous month, while compared with a year earlier prices rose 2.5 percent inline with median estimates and above the previous 2.2% rise, on the back of rising food the Office for National Statistics said today, electricity and energy prices. Core CPI though rose 0.3% in February after falling 0.1% in January, while compared with a year earlier Core prices rose only 1.2% below the 1.4% expected rise.

The Office for National Statistics also reported that retail price index rose 0.8 percent in February after falling 0.5% back in January, while retail prices inclined 4.1% compared from a year earlier unchanged from the previous estimate.

BOE officials are yet to figure out the extent of damage from a U.S credit meltdown, since the U.K economy is considered a services dependant economy, the services sector accounts for almost 3/4 of the economy, and fallout in the U.K financial sector could prove to be devastating.

Economists believe the BOE are going to cut interest rates by another quarter basis points as soon as April rather than May, this drove the Pound to a record low against the Euro and a 3-year low the Yen, this perspective is supported by the fact that the BOE doesn't seem to have a lot of space in cutting rates particularly if they aim to stabilize price stability over the medium to long terms!

Today the Feds will announce their rate decision, expectations to see a 1 percentage point cut are almost locked in, while some market players even believe the Feds will implement a more aggressive cut; they expect the Feds to lower their interest rates to 1.75 percent!

The ongoing developments in the financial markets instilled fears in investors' hearts that was seen clearly from their reaction, as they dumped risky assets and headed to more safe investments after the Bear Sterns crash and continued through yesterday, but today they remain anxious to see outcome of the Feds' decision, should it meet markets' expectations or not!