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No hike expected from until end of 2015 – Rabobank

FXStreet (Barcelona) -Jane Foley, Senior Currency Strategist at Rabobank explained that there is some common ground at present between the economic backdrops that are presenting themselves to the BoE and the Fed.

Key Quotes:

“Both central banks are presiding over economic recoveries, but these are being developed within a low inflationary backdrop. Commodity prices are soft; Brent oil has this week touched a 27 month low and food prices are been pushed lower by strong harvests”.

“Although there have been clear improvements in the labour markets of both the UK and the US, the lack of wage inflation in both economies is suggestive of continued slack in the market”.

“It is the combination of both low wage inflation and weak price pressures which is responsible for our view that neither the BoE nor the Fed will be in any rush to hike interest rates”.

“We do not expect a rate hike in the UK before May 2015 at the earliest. We do not expect to see a hike from the Fed until the end of next year”.

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