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Executive Summary:
- Seen keeping policy rates unchanged, with a much-needed downtick in inflation helping the board steer clear of further hikes
- Consensus among the sell-side is now building for 7% to be the ceiling for rates over the short-term
- This leaves FX intervention the primary policy tool in the coming months
Full preview here:
August inflation slipped to 17.2% from 17.5%, and was comfortably below the bank’s assumption of a 19.3% clip, and as base effects slip into the calculations, it’s likely CPI will moderate further from here – again the assumption of the majority of the rate-setting members.
Despite the consensus view that price rises could slow from here, a minority of voters on the board still see the risk of inflation expectations becoming contaminated the longer inflation holds above the bank’s 3-percent tolerance band. As such, the bank are unlikely to follow the lead of the Hungarian central bank by ruling out further rate rises this cycle.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Why MNI
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.
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