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Upward pressures to Sterling to come? - ING

FXStreet (Guatemala) - Despite two yes votes form the MPC, James Knightley analyst at ING Bank NV (ING) explained that the BoE minutes stated that “for most members, there remained insufficient evidence of inflationary pressures to justify an immediate increase in Bank Rate”.

Key Quotes:

“They felt that the rate of growth would moderate while inflation was expected to “reach the 2% target only at the end of the three-year forecast period””.

“They also cited weak wages and the possibility labour market slack may have been greater than previously thought”.

“By delaying rate hikes it would “allow the expansion to become more entrenched”. Indeed, raising rates too early in the absence of wage rises could increase “the vulnerability of highly indebted households”, while also adding to upward pressure on sterling”.

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