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12 Feb 2013
Forex Flash: UK inflation data in focus today – BTMU
Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that the main economic data release in Europe today will be the UK inflation report for January which is expected to reveal that inflation picked up modestly extending its period above the BoE’s 2.0% inflation target to 38 months.
He comments that in an unusual move last week, the BoE released a policy statement following no change in policy reiterating that the MPC continues to look through the current above target levels of inflation seeing much of the elevated level as due to administered and regulated prices rather than underlying domestic inflation pressures.
He writes, “Interestingly, the statement also acknowledged that inflation “may remain above their 2.0% target for the next two years” which implies that tomorrow’s release of the BoE’s latest quarterly inflation report may include notable upward revisions to inflation projections for 2014. Still the BoE is likely to reiterate again that it remains comfortable to tolerate the inflation overshoot to support growth which is seen as negative for the pound while growth remains weak.”
He comments that in an unusual move last week, the BoE released a policy statement following no change in policy reiterating that the MPC continues to look through the current above target levels of inflation seeing much of the elevated level as due to administered and regulated prices rather than underlying domestic inflation pressures.
He writes, “Interestingly, the statement also acknowledged that inflation “may remain above their 2.0% target for the next two years” which implies that tomorrow’s release of the BoE’s latest quarterly inflation report may include notable upward revisions to inflation projections for 2014. Still the BoE is likely to reiterate again that it remains comfortable to tolerate the inflation overshoot to support growth which is seen as negative for the pound while growth remains weak.”