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3 Apr 2015
UK rates might remain steady until later next year – Rabobank
FXStreet (Barcelona) - The Rabobank Team believes that with UK CPI expected to stay low for longer, BoE might keep keep rates steady until later in the next year.
Key Quotes
“By dropping to zero in February the UK CPI inflation rate immediately sparked a discussion as to whether the BoE could cut rates again. Even though CPI y/y inflation could fall into negative territory at some point over the coming months, such a move should be temporary.”
“The Bank has stated that long-term Inflation expectations have remained stable and since there is little sign that the UK consumer is adopting a deflationary mindset we expect that the next policy move from the BoE will be a hike.”
“That said, although we have been calling for no change in BoE policy until February 2016, the risk that UK CPI stays low for longer implies that steady rates could be in place until later next year.”
Key Quotes
“By dropping to zero in February the UK CPI inflation rate immediately sparked a discussion as to whether the BoE could cut rates again. Even though CPI y/y inflation could fall into negative territory at some point over the coming months, such a move should be temporary.”
“The Bank has stated that long-term Inflation expectations have remained stable and since there is little sign that the UK consumer is adopting a deflationary mindset we expect that the next policy move from the BoE will be a hike.”
“That said, although we have been calling for no change in BoE policy until February 2016, the risk that UK CPI stays low for longer implies that steady rates could be in place until later next year.”