19 Feb 2015
BoE to hike rates later this year - Wells Fargo
FXStreet (Bali) - Jay H. Bryson, Global Economist at Wells Fargo, notes that The decline in UK CPI inflation in the UK in recent months will delay, but likely not prevent, monetary tightening by the MPC later this year.
Key Quotes
"The decline in CPI inflation in the United Kingdom in recent months will delay, but likely not prevent, monetary tightening by the MPC later this year. Unless oil prices decline significantly further from current levels, the overall rate of CPI inflation in the United Kingdom should bottom out over the next few months and exceed 1 percent again later this year."
"Although inflation will likely remain below the BoE’s 2 percent target for some time, continued economic growth and further tightening in the labor market should cause CPI inflation to rise back toward the 2 percent target over the next two years. Accordingly, we look for the MPC to begin a slow process of raising interest rates that will take its main policy rate from its current setting of 0.50 percent to 1.50 percent by the end of 2016."
Key Quotes
"The decline in CPI inflation in the United Kingdom in recent months will delay, but likely not prevent, monetary tightening by the MPC later this year. Unless oil prices decline significantly further from current levels, the overall rate of CPI inflation in the United Kingdom should bottom out over the next few months and exceed 1 percent again later this year."
"Although inflation will likely remain below the BoE’s 2 percent target for some time, continued economic growth and further tightening in the labor market should cause CPI inflation to rise back toward the 2 percent target over the next two years. Accordingly, we look for the MPC to begin a slow process of raising interest rates that will take its main policy rate from its current setting of 0.50 percent to 1.50 percent by the end of 2016."