20 Mar 2014
Falling inflation buys time for the BoE - RBS
FXStreet (Guatemala) - Strategists at RBS explained that the coming week brings several key UK data releases, in particular inflation figures for February.
Key Quotes:
“We forecast a further fall in CPI inflation: to 1.7% in February, which would be the lowest outturn since October 2009”.
“Some of this disinflation is likely to prove temporary – stemming as it does from a combination of softening global commodity prices and an appreciation in sterling – but tentative signs of easing domestic inflationary pressures may well prove to be more durable given the still-anaemic trends in wage inflation”.
“This is not to suggest that the UK is transitioning to a more permanent low inflation environment – that would be a courageous call given the UK's track record – but it does seem increasingly likely that CPI inflation will remain below its 2% target into 2015, buying the MPC some time as it prepares to exit from 'emergency' policy settings. The MPC personnel changes announced this week do not obviously signal a shift in the policy bias but the theme of 'insiders' departing (Bean) or losing out (Dale, Fisher) hints at a Committee which may be more naturally disposed towards the Carney-Osborne world view”.
Key Quotes:
“We forecast a further fall in CPI inflation: to 1.7% in February, which would be the lowest outturn since October 2009”.
“Some of this disinflation is likely to prove temporary – stemming as it does from a combination of softening global commodity prices and an appreciation in sterling – but tentative signs of easing domestic inflationary pressures may well prove to be more durable given the still-anaemic trends in wage inflation”.
“This is not to suggest that the UK is transitioning to a more permanent low inflation environment – that would be a courageous call given the UK's track record – but it does seem increasingly likely that CPI inflation will remain below its 2% target into 2015, buying the MPC some time as it prepares to exit from 'emergency' policy settings. The MPC personnel changes announced this week do not obviously signal a shift in the policy bias but the theme of 'insiders' departing (Bean) or losing out (Dale, Fisher) hints at a Committee which may be more naturally disposed towards the Carney-Osborne world view”.