Despite inflation above 2% (latest UK CPI data, for May) expectations are for the Bank of England to remain on hold at their June 24 meeting.
Bank to view inflation as transitory only
More via Reuters:
- The Bank will tolerate it at 3.0-3.5% before feeling discomfort, medians showed.
- While the earliest expectation for a hike was not until Q3 2022, nine of 50 economists in the latest poll predicted an increase before the end of next year compared with four of 35 last month. The median for end-2023 was lifted to 0.50% from 0.25%.
Some analyst comments:
- "We think high inflation will be temporary as this year's price rises give way to a sharper fall in inflation next year due to base effects," said George Buckley at Nomura. "At the same time, we expect the BoE to be keen to protect what could prove to be a fragile recovery, with output well below its pre-pandemic path."
- "The debate on whether or not to raise bank rate at some point next year looks set to become more finely balanced. And, if the upside surprises continue, calls for a rate rise on the MPC may grow louder," said Chris Hare at HSBC.
BOE Gov Bailey:
