UK: Still no closer to rate hike – ING

By FXStreet James Knightley, Senior Economist at ING, suggests that while the UK economy is described as resilient, the BoE cite external worries, plunging commodity prices and financial market turbulence as factors that will restrain inflation.

Key Quotes

“The Bank of England left Bank Rate unchanged in a unanimous decision last week with Ian McCafferty no longer voting for a 25bp rate rise. The minutes and the Inflation Report placed significant emphasis on the recent financial market turmoil and the concerns about an external demand slowdown, particularly in emerging markets. The plunge in commodity prices and the fact wages have not risen as quickly as anticipated meant that inflation “is likely to remain below 1% until the end of the year” according to the Bank. Indeed, it was this disappointment on wages that led to McCafferty changing his call.

There had been some talk ahead of the meeting that BoE Chief Economist Andy Haldane could potentially vote for a rate cut given his dovish rhetoric. However, when BoE Governor Mark Carney was questioned whether he still felt that the next move in rates would be upwards (given that markets were pricing in a 30% chance of a cut this year), he confirmed that …read more

Source:: FX Street