Forex Flash: UK inflation hawkish forecasts offset by dovish rhetoric – Nomura

Nomura economists Phillip Rush and Andy Chaytor have taken a look at today´s UK inflation data and note the conflicting sentiment between forecasts and rhetoric.

They note that the Bank of England left its growth forecasts broadly alone, but hiked its inflation forecasts such that the MPC sees itself as more likely than not to miss its target throughout the medium term. Although the forecasts are surprisingly hawkish, the rhetoric remains dovish, with the door being left open to easing further if needed. Absent this, it appears the MPC expects to be on hold until 2015, albeit perhaps hiking a few months earlier than priced.