- In one line: On track for no change in June; the MPC has set a high bar for further upside surprises to its forecasts.
Samuel Tombs (UK Economist)U.K.
- In one line: Low medium-term inflation forecasts signal the MPC doesn’t intend to hike rates any further.
Samuel Tombs (UK Economist)U.K.
- CPI inflation likely fell to 10.3% in December, from 10.7% in November, a hefty 0.6pp below the MPC’s forecast.
- Motor fuel prices plunged in December, while flash Eurozone data point to a further slowing in food price rises.
- Evidence is mixed on core goods price momentum, but the usual surge in airfares won’t lift the services CPI much.
Samuel Tombs (UK Economist)U.K.
- In one line: No strong signals on the terminal rate, but the crumbling of hawkish dissent suggests we are close.
Samuel Tombs (UK Economist)U.K.
Sterling's rally has been driven by the elimination of the fiscal risk premium, which we doubt will return...
...But the current account deficit will remain large next year, despite the recession, leaving sterling vulnerable.
The MPC likely will hold back from raising Bank Rate as far as markets expect; we look for $1.15 in the spring.
Samuel Tombs (UK Economist)U.K.
- Employment essentially held steady in Q3, despite the fall in GDP; vacancies have remained at a high level too.
- But the rise in corporate borrowing costs looks set to be sharp enough to spark a wave of redundancies next year.
- Wage growth was far too strong for the MPC too tolerate in September, but timelier data point to a slowdown.
Samuel Tombs (UK Economist)U.K.
- In one line: New forecasts and guidance suggest the end of the hiking cycle is near.
Samuel Tombs (UK Economist)U.K.