Forex Flash: Sterling - forthcoming inflation report did not prompt more QE – Bank of America - Merrill Lynch

FXstreet.com (London) - The BoE didn’t expand QE further yesterday and Nick Bate writing for Global Economic Weekly at Bank of America-Merrill Lynch noted that the BoE’s May Inflation Report may forecast may have shown the GDP outlook largely unchanged from February, with some slightly better UK data of late (Q1 GDP, PMIs, credit conditions) potentially offset by a slightly weaker global backdrop.

And he added, ‘The BoE’s near-term CPI inflation forecasts are likely to be revised down a little though – perhaps by 0.3-0.4pps or so – driven by recent declines in various commodity prices. But with the nearly 3% fall in GBP since the start of the year still feeding through, we expect the medium-term profile to again show CPI inflation falling slowly back to target through 2014 and 2015.’