19 Aug 2015
UK CPI: BoE will not be hastened into early move - Nomura
FXStreet (Bali) - According to Nomura's European Economist
Philip Rush, the BOE MPC will take comfort from the latest UK CPI numbers, but will not be hastened into an earlier move.
Key Quotes
"Inflation was stronger than expected, at least on the CPI, which increased to a high 0.1% y-o-y from a low 0.0% (i.e. +19bp to 0.145%). This was associated with the most unseasonably strong monthly inflation since June 2014 in what has become an upward trend in recent months."
"At least for us, the upside news was in clothing, airfares and games and toys. As all of these are in the basket of the “core” index (i.e. excluding energy, food, alcohol and tobacco), “core” CPI surprised by even more with a 39bp rise to 1.2% y-o-y."
"Other measures of core, like volatility weighted or the median, were much less sensitive to this, and the MPC is likely to take those into account when judging whether the hoped for rise in core inflation is coming through as planned."
"As such, we believe the MPC will take comfort from these numbers as being consistent with staying on the same exit path, but will not be hastened into an earlier move."
Philip Rush, the BOE MPC will take comfort from the latest UK CPI numbers, but will not be hastened into an earlier move.
Key Quotes
"Inflation was stronger than expected, at least on the CPI, which increased to a high 0.1% y-o-y from a low 0.0% (i.e. +19bp to 0.145%). This was associated with the most unseasonably strong monthly inflation since June 2014 in what has become an upward trend in recent months."
"At least for us, the upside news was in clothing, airfares and games and toys. As all of these are in the basket of the “core” index (i.e. excluding energy, food, alcohol and tobacco), “core” CPI surprised by even more with a 39bp rise to 1.2% y-o-y."
"Other measures of core, like volatility weighted or the median, were much less sensitive to this, and the MPC is likely to take those into account when judging whether the hoped for rise in core inflation is coming through as planned."
"As such, we believe the MPC will take comfort from these numbers as being consistent with staying on the same exit path, but will not be hastened into an earlier move."