UK Inflation: Governor Carney dodges the ink for another month
A sigh of relief this morning for the Bank of England and its policymakers as UK Inflation missed its 3.1% forecast and remained unchanged at 3.0%. Governor Carney dodged his ink pen for yet another month, avoiding the need to explain to the Chancellor of the Exchequer when inflation surpasses the 3.0% mark.
The MPC will be hoping that the current headline inflation figure will be the peak for 2017 as they expect the recent Interest Rate hike to 0.50% to slowly filter into the economy and gradually push UK Inflation closer to 2%. If this is the case, sterling hawks could be muted for longer than they had hoped as the Bank of England reiterated in its November meeting that they expected only 2 further rate hikes between now and 2020. As Brexit woes continue to hinder a UK government that seems to be in self-combust mode of late, the weakening local currency has also started to reflect the lack of confidence in Theresa May’s government, which won’t help sterling rebound unless Brexit negotiations bear fruit, which at the moment is a long shot for 2017.
Anthony Kurukgy quoted in Reuters