BOE Expects Rates to Rise Sooner Than Market Forecasts

Mark Carney has warned interest rates may rise earlier than the City expects, despite Bank of England expectations that inflation will turn negative for the first time in more than half a century.

The slump in oil prices and falling food prices is likely to push inflation to zero in the second and third quarters, probably dipping into negative territory for one or two months in the spring, the Bank said in its February inflation report.

However, Carney, the Bank’s governor, said negative inflation in the UK would not lead to the dangerous deflationary spiral feared in the eurozone.

UK inflation was 0.5% in December, well below the Bank’s 2% target. The last time headline inflation was negative in Britain was March 1960, according to the closest comparable data from the Office for National Statistics.

via The Guardian

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza