16 Dec 2014
UK inflation surprise ad deviates further from 2% target - ING
FXStreet (Guatemala) - James Knightley, analyst at ING Bank, explained that the November UK consumer price inflation has really surprised on the downside, coming in at 1% versus the 1.2% consensus and the 1.3% rate recorded in October.
Key Quotes:
“Bank of England Governor Carney looks almost certain to write a letter to the Chancellor explaining why inflation has deviated so far from the 2% target.”
“Carney suggested in November he felt that this was a likely scenario, but given his view that it was being driven by temporary factors and the fact that the UK growth story looks in good shape he is not going to suggest any policy action”.
“Today, he again suggested the BoE will look through the oil price impact on UK inflation, as they did when CPI spiked to 5.1% in September 2011”.
“Nonetheless, it gives the BoE plenty of room to leave policy ultra-loose and so it is not surprising to see financial markets push back the timing of the first rate hike and sterling remaining under pressure – however Carney’s comments this morning that the sharp oil price drop is “unambiguously net positive” for the UK have offered some support”.
“We had been thinking that the BoE may hike soon after the General Election in May, but given the lack of inflation pressures a 3Q move is more probable”.
Key Quotes:
“Bank of England Governor Carney looks almost certain to write a letter to the Chancellor explaining why inflation has deviated so far from the 2% target.”
“Carney suggested in November he felt that this was a likely scenario, but given his view that it was being driven by temporary factors and the fact that the UK growth story looks in good shape he is not going to suggest any policy action”.
“Today, he again suggested the BoE will look through the oil price impact on UK inflation, as they did when CPI spiked to 5.1% in September 2011”.
“Nonetheless, it gives the BoE plenty of room to leave policy ultra-loose and so it is not surprising to see financial markets push back the timing of the first rate hike and sterling remaining under pressure – however Carney’s comments this morning that the sharp oil price drop is “unambiguously net positive” for the UK have offered some support”.
“We had been thinking that the BoE may hike soon after the General Election in May, but given the lack of inflation pressures a 3Q move is more probable”.