17 Jun 2015
BoE Minutes: Positive outlook for UK Q2 GDP – TDS
FXStreet (Barcelona) - The TD Securities Team reviews the Bank of England’s policy meeting minutes and further shares their observations on UK consumption and tomorrow’s retail sales report.
Key Quotes
“…there were no real surprises there with another 9-0 vote for rates unchanged, as it would have been very strange to see the hawks change their votes in a month where they were looking at the first negative Y/Y inflation print in decades.”
“With yesterday’s CPI report though showing such soft trends in core inflation, we don’t think that the BoE will be in any great rush to start considering rate hikes, and we still don’t look for the MPC hawks, Weale and McCafferty, to begin voting again for rate hikes until at least the August meeting, if not later.”
“Looking at the rest of the minutes, the BoE discussed that UK Q1 GDP data had disappointed but would likely pick up in Q2, that any pick-up in housing/lending would be dealt with through macroprudential policy via the FPC rather than monetary policy, that with the new government fiscal consolidation would continue to weigh on growth, and that it was a little surprising how little of the windfall from lower oil prices had been spent by consumers, both in the UK and abroad. On that last note we are seeing signs of a rebound in UK consumer spending, and after yesterday’s soft CPI data we do think that the risks now lie to the upside for tomorrow’s UK retail sales report, as soft inflation should help to boost retail volumes.”
Key Quotes
“…there were no real surprises there with another 9-0 vote for rates unchanged, as it would have been very strange to see the hawks change their votes in a month where they were looking at the first negative Y/Y inflation print in decades.”
“With yesterday’s CPI report though showing such soft trends in core inflation, we don’t think that the BoE will be in any great rush to start considering rate hikes, and we still don’t look for the MPC hawks, Weale and McCafferty, to begin voting again for rate hikes until at least the August meeting, if not later.”
“Looking at the rest of the minutes, the BoE discussed that UK Q1 GDP data had disappointed but would likely pick up in Q2, that any pick-up in housing/lending would be dealt with through macroprudential policy via the FPC rather than monetary policy, that with the new government fiscal consolidation would continue to weigh on growth, and that it was a little surprising how little of the windfall from lower oil prices had been spent by consumers, both in the UK and abroad. On that last note we are seeing signs of a rebound in UK consumer spending, and after yesterday’s soft CPI data we do think that the risks now lie to the upside for tomorrow’s UK retail sales report, as soft inflation should help to boost retail volumes.”