Inflation remains a threat for the BOE as they struggle to get the economy through these critical times, with prospects of slowing growth while upside risks to inflation still limits the Bank's ability to deal with the situation…

Industrial production declined 0.1 percent in January after falling 0.2 percent the previous month and below median estimates of a 0.1% rise, while Manufacturing Production inclined 0.4 percent in January after falling 0.2% back in December, beating median estimates of a 0.1% rise.

While producers charged less in February according to the Office for National Statistics, the Producer Price Index for outputs rose only 0.3% after rising 1.0% in January, while from a year earlier prices rose 5.7% unchanged from the previous rise. The Core PPI on the other hand rose 0.2 percent in February after rising 0.8% the previous month, while from a year earlier core PPI rose 3.0% slightly below the 3.1%.

The markets however decided to look at the bright side as the Pound seems to have settled above the two dollar barrier, inflation rose below expectations yet it will come down to the CPI to see whether consumers paid more prices or not!

The BOE decided to keep their rates unchanged last week at 5.25 percent, fears of rising inflation over the coming months remains a threat for the BOE, while they have yet to figure out the extent of the slowing economical activity.

The U.S slowing economy might have a deep impact on the U.K's economy; since they are very dependant on the services sector that includes the financial sector that started all this mess in the United States, should the financial sector in the U.K start feeling the heat of the U.S credit meltdown, the aftermath could be sever, but we remain positive that the BOE unlike their Feds counterparts are already one step ahead!!!