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2 Jan 2015
UK: January’s MPC meeting likely to be uneventful – RBS
FXStreet (Barcelona) - Ross Walker, Senior UK Economist at RBS, believes the January’s MPC meeting will likely be uneventful, further anticipating the Bank rate and QE purchase target to remain unchanged through 2015 on the back of a persistent undershoot in inflation.
Key Quotes
“January's MPC meeting is likely to be uneventful: unchanged policy settings, no policy statement on the day, and another 7-2 vote (Minutes on 21 January).”
“Our forecast is for an unaltered Bank Rate and QE purchase target throughout 2015, against the backdrop of a sizeable and persistent undershoot in inflation.”
“Globally, the recovery remains uneven and a little lethargic while domestically heightened political risk and the resumption of a significant and sustained fiscal tightening should alleviate some of the pressure for pre-emptive monetary policy action. The latest data-flow is likely to reinforce the theme of a modest loss of momentum into the new year.”
“Although the MPC will look through the first-round effects of lower oil prices on CPI inflation, monthly inflation prints of 0.5% y/y (or even lower) would clearly lessen the chances of pre-emptive action.”
“Emerging evidence of an underlying moderation in the pace of economic and employment growth will afford the MPC some additional leeway. Similarly, rising political risk and a resumption of fiscal policy tightening will tend to lean against pre-emptive monetary policy action.”
“We do not expect any additional voting dissent this side of the May 2015 Inflation Report, so the UK monetary policy landscape is likely to be rather dull for much of the first half of 2015.”
Key Quotes
“January's MPC meeting is likely to be uneventful: unchanged policy settings, no policy statement on the day, and another 7-2 vote (Minutes on 21 January).”
“Our forecast is for an unaltered Bank Rate and QE purchase target throughout 2015, against the backdrop of a sizeable and persistent undershoot in inflation.”
“Globally, the recovery remains uneven and a little lethargic while domestically heightened political risk and the resumption of a significant and sustained fiscal tightening should alleviate some of the pressure for pre-emptive monetary policy action. The latest data-flow is likely to reinforce the theme of a modest loss of momentum into the new year.”
“Although the MPC will look through the first-round effects of lower oil prices on CPI inflation, monthly inflation prints of 0.5% y/y (or even lower) would clearly lessen the chances of pre-emptive action.”
“Emerging evidence of an underlying moderation in the pace of economic and employment growth will afford the MPC some additional leeway. Similarly, rising political risk and a resumption of fiscal policy tightening will tend to lean against pre-emptive monetary policy action.”
“We do not expect any additional voting dissent this side of the May 2015 Inflation Report, so the UK monetary policy landscape is likely to be rather dull for much of the first half of 2015.”