18 Feb 2015
UK lower CPI plays against an early rate hike by BoE – Danske Bank
FXStreet (Edinburgh) - The lower trend in the UK consumer prices could prompt the BoE to wait longer before starting its hiking cycle.
Key Quotes
“In the Inflation Report published last week, Bank of England (BoE) lowered its short term inflation forecasts significantly, mainly due to the lower oil prices”.
“The BoE now expects inflation to stay low in the short-term but to pick up in the medium-term”.
“Hence the Bank Rate could be raised despite the low inflation if the medium-term outlook calls for a tighter monetary policy”.
“This supports the case for a rate hike this year”.
“We currently expect BoE to hike at its August 2015 meeting. However, the low inflation is a downside risk to this forecast as it gives the BoE the opportunity to be more patient”.
Key Quotes
“In the Inflation Report published last week, Bank of England (BoE) lowered its short term inflation forecasts significantly, mainly due to the lower oil prices”.
“The BoE now expects inflation to stay low in the short-term but to pick up in the medium-term”.
“Hence the Bank Rate could be raised despite the low inflation if the medium-term outlook calls for a tighter monetary policy”.
“This supports the case for a rate hike this year”.
“We currently expect BoE to hike at its August 2015 meeting. However, the low inflation is a downside risk to this forecast as it gives the BoE the opportunity to be more patient”.