Free Trial

BOE: Inflation Risks Seen Skewed to Upside

MNI (London)

The Bank of England MPC voted 7-2 to raise the Bank Rate by 50bp to 5.0% at today's meeting, an upside surprise to consensus expectations of a 25bp increase

  • The minutes flagged that inflation had surprised to the upside in the May data. Holding steady at +8.7% y/y, this was 0.3pp higher than Bank forecasts, whilst the 0.5pp jump in services CPI to +7.4% y/y represented a 0.5pp upside surprise. The MPC "continued to judge that the risks around the [May modal] inflation projection were skewed significantly to the upside"
  • Average weekly earnings rose +7.6% 3m/yoy in April, also outpacing the Bank's May forecasts by 0.5pp, however, forward-looking soft data suggests that pay growth is slowing.
  • The Bank continued to project headline GDP to be flat in Q2, rising to +0.25% in Q3, . albeit noting that uncertainty regarding Q3 outlooks has risen.
  • In his quarterly letter to the Chancellor, BOE Governor Bailey confirmed "the full impact of the increase in Bank Rate to date will not be felt for some time."

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.