17 Dec 2014
Carney getting his pen out - BTMU
FXStreet (Guatemala) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ noted that BoE Governor Carney has his pen out and will soon be writing a letter to Chancellor Osborne as to why inflation has fallen by more than 1.0ppt away from the 2% target level.
Key Quotes:
"The annual CPI rate fell from 1.3% to 1.0% in November with the core rate falling 0.3ppt too to 1.2%, underlining the scope for caution on raising interest rates. However, the pound remained well supported in part due to BOE Governor Carney playing up the net benefit of falling oil prices for the real economy and playing down the potential risks for the UK economy from the crisis in Russia."
"The data today will be key. Deputy Governor Cunliffe also spoke yesterday and stressed the importance of wage growth in lifting inflation back to target. The weekly average earnings annual increase is expected to accelerate in the wage data today on the back of improving labour market conditions."
"The 3mth annualised wage growth is currently robust at over 3% and the signs are there that wage growth is accelerating. If confirmed today, it would go a long way in supporting the pound after yesterday’s weak inflation data. The BOE minutes of the December meeting will likely continue to show disagreement on the degree of spare capacity in the economy with two members dissenting and voting for an immediate rate increase."
Key Quotes:
"The annual CPI rate fell from 1.3% to 1.0% in November with the core rate falling 0.3ppt too to 1.2%, underlining the scope for caution on raising interest rates. However, the pound remained well supported in part due to BOE Governor Carney playing up the net benefit of falling oil prices for the real economy and playing down the potential risks for the UK economy from the crisis in Russia."
"The data today will be key. Deputy Governor Cunliffe also spoke yesterday and stressed the importance of wage growth in lifting inflation back to target. The weekly average earnings annual increase is expected to accelerate in the wage data today on the back of improving labour market conditions."
"The 3mth annualised wage growth is currently robust at over 3% and the signs are there that wage growth is accelerating. If confirmed today, it would go a long way in supporting the pound after yesterday’s weak inflation data. The BOE minutes of the December meeting will likely continue to show disagreement on the degree of spare capacity in the economy with two members dissenting and voting for an immediate rate increase."