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18 Mar 2015
BoE might hike in August, but risks tilted for a later hike – Danske
FXStreet (Barcelona) - With the UK economy growing at a strong pace and labour market improving, Analyst at Danske Bank, Mikael Olai Milhøj, expects BoE to hike rates in August, with risks tilted for a later hike in Q3 or Q4.
Key Quotes
“We still expect the first hike in August. The economy is growing at a solid pace, the slack in the labour market is diminishing and inflation is mainly being pulled down by temporary factors.”
“The fall in energy and food prices should drop out of the inflation rate towards the end of the year. Therefore, the Bank of England can look beyond the low headline inflation if the medium-term inflation outlook calls for a tighter monetary policy, as the MPC recognizes that monetary policy works with a lag.”
“However, we stress that risks are tilted towards a hike later in Q3 or possibly in Q4 as wage growth is still subdued and the appreciation of sterling puts downward pressure on inflation through lower import prices.”
Key Quotes
“We still expect the first hike in August. The economy is growing at a solid pace, the slack in the labour market is diminishing and inflation is mainly being pulled down by temporary factors.”
“The fall in energy and food prices should drop out of the inflation rate towards the end of the year. Therefore, the Bank of England can look beyond the low headline inflation if the medium-term inflation outlook calls for a tighter monetary policy, as the MPC recognizes that monetary policy works with a lag.”
“However, we stress that risks are tilted towards a hike later in Q3 or possibly in Q4 as wage growth is still subdued and the appreciation of sterling puts downward pressure on inflation through lower import prices.”