15 Jul 2014
UK inflation running at its fastest rate since January - ING
FXStreet (Łódź) - James Knightley from ING comments on the UK CPI numbers which came in much higher than expected.
Key quotes
"In the near-term, inflation is likely to remain subdued with the producer price inflation figures highlighting a lack of pipeline price pressures while remarkably low wage rate numbers also point to little near-term inflation threat."
"The strength of sterling will also help limit the upside for inflation."
"Nonetheless, with the economy likely growing at 3%+ rates in both 2014 and 2015, jobs being created in significant numbers and company order books looking in their best shape for many years, the amount of spare capacity in the UK economy is being eroded."
"This should lead to a gradual build-up in domestic inflation pressures and given the BoE is targeting inflation in 2 years’ time, not what it is doing right now, we now favour a rate hike in November."
"This would also remove political concerns of waiting until early next year when election campaigning is in full swing and should keep sterling supported – we target EUR/GBP at 0.78."
Key quotes
"In the near-term, inflation is likely to remain subdued with the producer price inflation figures highlighting a lack of pipeline price pressures while remarkably low wage rate numbers also point to little near-term inflation threat."
"The strength of sterling will also help limit the upside for inflation."
"Nonetheless, with the economy likely growing at 3%+ rates in both 2014 and 2015, jobs being created in significant numbers and company order books looking in their best shape for many years, the amount of spare capacity in the UK economy is being eroded."
"This should lead to a gradual build-up in domestic inflation pressures and given the BoE is targeting inflation in 2 years’ time, not what it is doing right now, we now favour a rate hike in November."
"This would also remove political concerns of waiting until early next year when election campaigning is in full swing and should keep sterling supported – we target EUR/GBP at 0.78."