12 Feb 2015
BoE: Growth details and general election risks ahead - ING
FXStreet (Guatemala) - James Knightley, analyst at ING Bank noted the BoE's Inflation Report earlier, and explained a couple of pointers on growth and risks of the General election.
Key Quotes:
"As for growth, the BoE argue that the combination of looser global monetary policy and the plunge in energy prices will support global demand. The BoE also sound upbeat on domestic consumption and investment with rising real wages and improving credit conditions supporting activity. They predict that the economy will expand at just under a 3% annual rate for much of the forecast horizon."
"The other risk that the BoE doesn't really address is the implications from the General Election. It is likely to generate significant uncertainty given the closeness of opinion polls, which could weigh on sentiment and activity. As such a fairly neutral Inflation Report is unsurprising. However, if the election passes without too much economic pain we remain very upbeat on the UK's economic prospects. With employment rising strongly we suspect wage growth could accelerate by more than the BoE suggest."
"Furthermore, if the raft of recent global monetary stimulus supports activity more broadly and commodity prices respond then we could see inflation rise more quickly. Consequently, we still see a strong probability of a rate rise before the end of the year."
Key Quotes:
"As for growth, the BoE argue that the combination of looser global monetary policy and the plunge in energy prices will support global demand. The BoE also sound upbeat on domestic consumption and investment with rising real wages and improving credit conditions supporting activity. They predict that the economy will expand at just under a 3% annual rate for much of the forecast horizon."
"The other risk that the BoE doesn't really address is the implications from the General Election. It is likely to generate significant uncertainty given the closeness of opinion polls, which could weigh on sentiment and activity. As such a fairly neutral Inflation Report is unsurprising. However, if the election passes without too much economic pain we remain very upbeat on the UK's economic prospects. With employment rising strongly we suspect wage growth could accelerate by more than the BoE suggest."
"Furthermore, if the raft of recent global monetary stimulus supports activity more broadly and commodity prices respond then we could see inflation rise more quickly. Consequently, we still see a strong probability of a rate rise before the end of the year."