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BoE to remain ambiguous on rate hike timing at Inflation Report briefing - ING

FXStreet (Łódź) - James Knightley from ING believes that during the briefing following the release of BoE's quarterly Inflation Report tomorrow improvements in the UK economy will be highlighted while the timing of the first rate hike will not be specified.

Key quotes

"Given the good run of data since the May Inflation Report, we wouldn’t be surprised to see the BoE lower its assessment to perhaps 0.75-1.25% of GDP."

"We will be focusing on the general tone of the report and the press conference which is likely to echo the sentiment expressed in the minutes to the previous two BoE policy meetings."

"We expect BoE Governor Mark Carney to again emphasize that the decision on policy are very much data dependent, thereby indicating that if we continue to see strong growth numbers and wages respond to the tightening labor market then we could see an interest rate rise as early as November."

"Carney could be asked directly if anyone voted for a rate rise. The most likely candidate would be Martin Weale, in our view, given that he voted for such action in the January-July 2011 period and the fact that in June he warned unemployment could fall faster than the MPC expects, which “points to a need for a policy profile tighter than in our May forecasts."

"The main risks to our view, which are likely to also be highlighted by Carney are that sterling strengthens more aggressively than we anticipate, which is also linked to the potential for a weaker Eurozone backdrop and/or escalating geopolitical tensions."

"The other potential stumbling block would be a vote in favour of Scottish independence, which would likely lead to market volatility and economic uncertainty, which would result in a delay to policy tightening."

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