BoE: More room for a GBP-positive outcome on one final rate hike – ING
|A big CPI miss makes Thursday's BoE meeting an even closer call. Economists at ING analyze GBP outlook ahead of the Interest Rate Decision.
A BoE hike is in doubt after a CPI miss
A huge miss in UK inflation is casting serious doubts about whether the Bank of England will hike rates. Headline CPI decelerated from 6.8% to 6.7% in August, despite expectations of a rebound to 7.0%. Most importantly, core inflation slowed significantly, from 6.9% to 6.2% (consensus was 6.8%). Service inflation, which is the gauge the BoE is mostly focused on, fell from 7.4% to 6.8%, which is below the bank’s own August forecast.
Our economics team continues to marginally favour one final rate hike. If we are right, there is clearly more room for a GBP-positive outcome, given today’s post-CPI drop in the Pound.
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