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Flash: A slowing inflation picture may allow BoE to implement aggressive policy measures - Rabobank

FXstreet.com (Barcelona) - The Sterling finished the day on a strong note, at one point trading as high as 1.5276 before leaking lower later in the day and closing up 90 pips at 1.5257.

It will be busy upcoming European session, as we will see a number of reports out of the UK including CPI, PPI, and Retail Price Index. According to analysts at Rabobank, “the UK CPI for April is the main release of the day ahead and is of interest because the annual inflation rate is anticipated to ease to 2.6% YoY from March’s 2.8%. Inflation peaked at 5.2% YoY in September 2011 (recall that regular series of ‘please explain’ letters from the BoE governor to the UK chancellor at that time?) and then slowed to 2.2% YoY by September 2012.

They went on to add, “ since then inflation has increased and there has been heightened expectations that it would again breach the 3.0% upper band of the BoE’s inflation target (of 1.0 – 3.0%). The CPI rose 2.8% YoY in February and again in March and now is anticipated to ease to 2.6% YoY in April. With the transition at the top of the BoE set to take place in early July, a picture of slowing inflation may open the door wider for the new governor, Mark Carney, to implement more aggressive non-conventional policy measures once he takes the reins."

Light red all across the board in Asia-Pacific

Red is the color seen across the board in the Asia-Pacific local share markets today, with Australian ASX leading the downside, losing last -0.71%, following latest RBA meeting minutes released moments ago. Other major indexes such as Nikkei, Shanghai, Hong-Kong's Hang-Seng or Korean Kospi are almost at break even, although still in the negative.
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