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BoE expected to remain on hold in October - RBS

FXStreet (Łódź) - Ross Walker, Senior UK economist at RBS believes that the BoE, which is scheduled to hold its monetary policy meeting next week, won't make any adjustments or issue a statement and will wait until the November Inflation Report to signal any changes.

Key quotes

"Activity data over the past month have been broadly in line with the August Inflation Report forecasts while inflation has continued to undershoot the MPC's central projection (averaging 1.57% in July and August vs a Q3 forecast of 1.81%).

"Moreover, with the next Inflation Report just a month away, any of the on-hold majority-7 MPC members inclined to vote for a Bank Rate hike seem more likely to do so in the context of updated forecasts next month."

"Hence, a 7-2 vote appears to be most likely in October and, on balance, in November too (with risks of a 6-3 outturn in November)."

"The RBS forecast remains for the first 25bp Bank Rate rise in February 2015, with 25bp hikes in May, August and November 2015."

"The risks around this forecast are for a later first move and a slower pace of tightening in 2015 (we attach a higher probability to the latter than the former)."

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