18 Jul 2014
Pegging the timing of BoE's first rate hike increasingly difficult - TD Securities
FXStreet (Łódź) - Jacqui Douglas, Senior Global Strategist at TD Securities suggests that while UK’s inflation prospects seem to be getting murkier, pegging the timing of the first rate hike is becoming that much more difficult.
Key quotes
"The inflation risks from global impulses are also to the downside, with Eurozone and US growth disappointing in H1, and European inflation still looking extremely soft, with easing biases in place for most of the rest of the continent."
"While the UK may literally be an island, figuratively it is not, and it’s hard to believe that the UK can just escape these global issues entirely unscathed."
"We think that next week’s GDP report will show that UK growth finally began to decelerate in Q2, and we look for GDP growth to average closer to 2% annualized than 3% over the second half of the year."
"That should leave the BoE more comfortable with keeping rates on hold for a while longer still, as fears of an overheated economy begin to dissipate."
"Slowing growth should help to ease the murkiness around the inflation outlook, showing that inflation and wages are still the right prices to watch for UK monetary policy."
Key quotes
"The inflation risks from global impulses are also to the downside, with Eurozone and US growth disappointing in H1, and European inflation still looking extremely soft, with easing biases in place for most of the rest of the continent."
"While the UK may literally be an island, figuratively it is not, and it’s hard to believe that the UK can just escape these global issues entirely unscathed."
"We think that next week’s GDP report will show that UK growth finally began to decelerate in Q2, and we look for GDP growth to average closer to 2% annualized than 3% over the second half of the year."
"That should leave the BoE more comfortable with keeping rates on hold for a while longer still, as fears of an overheated economy begin to dissipate."
"Slowing growth should help to ease the murkiness around the inflation outlook, showing that inflation and wages are still the right prices to watch for UK monetary policy."