14 Jan 2014
Flash: UK Inflation medium-term outlook: 2014 & 2015, GBP - RBS
FXstreet.com (Guatemala) - RBS strategists looked at the medium term outlook for UK inflation and consequences for the pound.
Key Quotes:
“2014 CPI inflation projections lowered slightly after the Dec 2013 data (lower starting point) and lower oil price futures strip”.
“2015 projections: Modest pick-up in inflation in H2 2015 reflecting economic recovery, £ depreciation and absence of Bank Rate rises until Q3-15”.
“Utility price hikes are now largely in the data, but we forecast a further cumulative 2.25% rise over Q1 2014”.
“$ crude oil price assumptions lowered in line with futures markets: $102 at end-14 (from $106) and $97.25 at end-15 (from $100)”.
“£ profile little altered: modest upside in the near-term, subsequent modest depreciation from mid-2014”.
“RBS BoE Bank Rate forecast: first 25bp hike in Q3 2015, with Bank Rate at 1.0% at end-15 forecast horizon”.
“Risks of an earlier rise in Bank Rate (H1 2015) but we expect the BoE to lower the unemployment rate guidance threshold in February 2014”.
“Mortgage rates drift a little lower in 2014 then edge up in line with higher Bank Rate expectations. House price inflation to boost MIPs element of RPI”.
Key Quotes:
“2014 CPI inflation projections lowered slightly after the Dec 2013 data (lower starting point) and lower oil price futures strip”.
“2015 projections: Modest pick-up in inflation in H2 2015 reflecting economic recovery, £ depreciation and absence of Bank Rate rises until Q3-15”.
“Utility price hikes are now largely in the data, but we forecast a further cumulative 2.25% rise over Q1 2014”.
“$ crude oil price assumptions lowered in line with futures markets: $102 at end-14 (from $106) and $97.25 at end-15 (from $100)”.
“£ profile little altered: modest upside in the near-term, subsequent modest depreciation from mid-2014”.
“RBS BoE Bank Rate forecast: first 25bp hike in Q3 2015, with Bank Rate at 1.0% at end-15 forecast horizon”.
“Risks of an earlier rise in Bank Rate (H1 2015) but we expect the BoE to lower the unemployment rate guidance threshold in February 2014”.
“Mortgage rates drift a little lower in 2014 then edge up in line with higher Bank Rate expectations. House price inflation to boost MIPs element of RPI”.