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BoE: 1st rate hike not until May 2015 at the earliest - Rabobank

FXStreet (Bali) - Jane Foley, Senior FX Strategist at Rabobank, does not expect a BoE rate hike until May 2015 at the earliest.

Key Quotes

"The minutes of the BoE’s September MPC meeting note that “accumulating evidence of the weakness in the euro area had been the most significant development during the month”.

"The UK economy may be undergoing a stronger recovery than the Eurozone, but in economic terms, the UK is not an island."

"Not only is the Eurozone the largest trading partner of the UK but some of the factors that are driving disinflationary pressures on the other side of the Channel are also having an impact in the UK."

"MPC member Forbes recently commented that data don’t show sufficient inflation pressure for a policy tightening while Broadbent drove home the now familiar guidance of the BoE by stating that the “point that we’re likely to get to after this period of rising interest rates will be materially lower than in the past”.

"On the back of weak inflationary pressures we do not expect a BoE rate hike until May 2015 at the earliest. From there we expect rates to move higher in a shallow trajectory. This makes us far more dovish than the market consensus."

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