6 Mar 2015
UK inflation poised to extend lower – Rabobank
FXStreet (Edinburgh) - Strategists at Rabobank believe UK consumer prices could intensify their decline in the upcoming periods.
Key Quotes
“UK CPI inflation is set to continue to fall in the coming months”.
“The minutes of the January MPC meeting suggested that the BoE then saw the chances of a dip below zero by UK CPI inflation during 2015H1 as roughly evenly balanced”.
“In February the Bank has described the chances of a below zero inflation rate this spring as ‘likely’. In his opening remarks in the presentation of the February Inflation Report, Bank of England Governor Carney chose not to linger over staff estimates for a negative inflation rate”.
“Instead he chose to emphasis the “stronger underlying dynamics which will determine UK output and inflation tomorrow” stressing that drop in oil price would only have a temporary impact on inflation and that it was “unambiguously positive for the global economy”.
“After the very dovish November Inflation Report had set market rates on course for not fully pricing in a BoE rate hike until late spring 2016, Carney’s tone appeared to be signalling that this momentum may have extended too far. Market rates have subsequently backtracked moderately”.
“We maintain our call that the first BoE rate hike of the cycle is unlikely until February 2016”.
Key Quotes
“UK CPI inflation is set to continue to fall in the coming months”.
“The minutes of the January MPC meeting suggested that the BoE then saw the chances of a dip below zero by UK CPI inflation during 2015H1 as roughly evenly balanced”.
“In February the Bank has described the chances of a below zero inflation rate this spring as ‘likely’. In his opening remarks in the presentation of the February Inflation Report, Bank of England Governor Carney chose not to linger over staff estimates for a negative inflation rate”.
“Instead he chose to emphasis the “stronger underlying dynamics which will determine UK output and inflation tomorrow” stressing that drop in oil price would only have a temporary impact on inflation and that it was “unambiguously positive for the global economy”.
“After the very dovish November Inflation Report had set market rates on course for not fully pricing in a BoE rate hike until late spring 2016, Carney’s tone appeared to be signalling that this momentum may have extended too far. Market rates have subsequently backtracked moderately”.
“We maintain our call that the first BoE rate hike of the cycle is unlikely until February 2016”.